MISH'S
Global Economic
Trend Analysis

Recent Posts

Saturday, March 28, 2015 8:20 PM


Can the Eurozone Survive? Not in Its Current Form Says PIMCO; Mish Response


Echoing statements I have made many times, PIMCO says the single currency area must become a "United States of Europe" in order to secure its future.

Please consider Eurozone can't survive in current form, says PIMCO.

The eurozone is "untenable" in its current form and cannot survive unless countries are prepared to cede sovereignty and become a "United States of Europe", the manager of the world's biggest bond fund has warned.

The Pacific Investment Management Company (PIMCO) said that while the bloc was likely to stay together in the medium term, with Greece remaining in the eurozone, the single currency could not survive if countries did not move closer together.

Persistently weak growth in the eurozone had led to voter unrest and the rise of populist parties such as Podemos in Spain, Syriza in Greece, and Front National in France, said PIMCO managing directors Andrew Bosomworth and Mike Amey.

"The lesson from history is that the status quo we have now is not a tenable structure," said Mr Bosomworth. "There's no historical precedent that this sort of structure, which is centralised monetary policy, decentralised fiscal policy, can last over multiple decades."

PIMCO said the rise of populist parties demonstrated how uneasy some people had become about the euro.

"[Persistently low growth] manifests itself in a lack of support in the common currency, so then it leads to the rise to power of political parties that want to end it," said Mr Bosomworth.

PIMCO said the rise of populist parties demonstrated how uneasy some people had become about the euro.

"[Persistently low growth] manifests itself in a lack of support in the common currency, so then it leads to the rise to power of political parties that want to end it," said Mr Bosomworth.
Nothing New 

I certainly agree the eurozone cannot survive unless it becomes the "United States of Europe".

There is absolutely nothing new in this announcement other than who said it. I have been talking about this for years.

Can the Eurozone Survive? 

It won't because it cannot. Germany's constitution prohibits a fiscal union and transfer mechanism. If that changes, I will change my tune.

And that's also something I have also said.

In addition to Germany's constitution, I believe Finland and other states would object. Heck, look at all the animosity over Greece. Look at work rules and retirement ages in France.

For a "United States of Europe" to work, countless issues would need to be worked out. And to top it off, eurozone rules are such that every nation would have to ratify the changes. What's the likelihood of that?

Bottom Line

If the Eurozone cannot survive without becoming the "United States of Europe", it cannot survive at all.

For detailed discussion on this topic, please see From ZIRP to NIRP: Virtues of Germany vs. the Vices of Greece; What About "Speece" and Gold? 

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

12:29 PM


Wally Becomes Chief Economist for Dilbert, Predicts "Bubble in Monetary Policy"


On the lighter side, in the March 28, 2015 Dilbert, Wally becomes the new chief economist.



Wally: "The exchange rate on derivatives will trigger a bubble in monetary policy and deflate the Yen."

I like the phrase "bubble in monetary policy". It aptly expresses precisely what has been happening globally.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Friday, March 27, 2015 8:40 PM


Patriot Act Vote Coming Up: Google joins Apple, Others Requesting Spying Controls


The Patriot act expires in June, and anyone in their right mind would wish the entire concept to go away entirely. NSA Spying has a 100% perfect track record of failure.

Sadly, the answer to the question Would NSA Data Surveillance End With Patriot Act? is a resounding "No".

The National Security Agency would lose its legal justification for collecting data on Americans' phone and email activity if Congress does not reauthorize the Patriot Act by June 1, but privacy advocates are skeptical about whether that would mean the end of the controversial surveillance program.

President Barack Obama has called on Congress to pass a bill that would end the bulk surveillance program while keeping certain spying powers intact for national security reasons. The clock is ticking, however, as the NSA loses its legal authority for domestic surveillance provided by Section 215 of the Patriot Act in June. If Congress does not renew that provision then the Obama administration will not push to continue the program, although its absence would damage America’s national security, says Ned Price, a spokesman for the National Security Council.

“If Section 215 sunsets, we will not continue the bulk telephony metadata program,” Price tells U.S. News. “Allowing Section 215 to sunset would result in the loss, going forward, of a critical national security tool that is used in a variety of additional contexts that do not involve the collection of bulk data.”

 The NSA, however, could invoke other legal powers to continue the data collection program without Section 215 of the Patriot Act, says Harley Geiger, senior counsel for the Center for Democracy and Technology advocacy group. The government has also conducted bulk collection of email metadata in the past using Section 214 of the Patriot Act, for instance, which is also called the Foreign Intelligence Surveillance Act “pen trap statute,” Geiger says.

“The FISA pen trap statute does not have a sunset and would not be affected by a sunset of Section 215,” he says. “For these and other reasons, we believe that legislation to end bulk collection would be more effective than merely letting Section 215 sunset. However, we believe Congress should sunset Section 215 if effective reform is not possible.”

Passing surveillance reform may be difficult in a Congress controlled by Republicans, considering it failed last year while Democrats controlled the Senate. Senate Majority Leader Mitch McConnell of Kentucky is among the Republicans who say the NSA powers are necessary to ensure national security.

I will vote for the Freedom Act as long as it doesn’t include reauthorization of the Patriot Act,” Paul told U.S. News recently, adding that he will not vote to reauthorize Section 215.

Paul told U.S. News he will also partner with Sen. Ron Wyden, D-Ore., on a bill to amend the Patriot Act when it comes up for reauthorization.

A bill introduced on Tuesday by Reps. Thomas Massie, R-Ky., and Mark Pocan, D-Wis., would abolish legal powers for surveillance programs, including the entire Patriot Act and the FISA Amendment Act of 2008.
Google joins Apple, Others Requesting Spying Controls

CNET reports Google joins Apple, others in calling for spying controls, as Patriot Act vote nears.
With an important surveillance-related section of the USA Patriot Act up for reauthorization this year, Google has teamed with other tech firms in sending a letter to lawmakers and others that spells out needed changes to US spy policies.

On Wednesday, Google revealed in a blog post that it has joined the Reform Government Surveillance coalition, civil rights groups and trade associations in sending the letter, which promotes transparency, accountability and an end to the bulk collection of data.

The letter (PDF) -- addressed to government figures including US President Barack Obama, Director of National Intelligence James Clapper, National Security Agency Director Michael Rogers and various House members -- underscores the need for reform that will both protect national security and preserve the right to privacy. Google also posted a page online where people can add their name in support of the reforms.

The catalyst for the letter is the USA Patriot Act -- specifically Section 215, which the NSA points to as the legal basis for its bulk collection of data. Section 215 is set to expire June 1, and lawmakers must vote before then on whether to reauthorize the section or allow it to "sunset."

The letter outlines what it says are "essential" elements to surveillance reform, mentioning Section 215, as well as Section 214 -- another part of the Patriot Act that the NSA could invoke to justify its bulk collection and one that's not set to expire this year.

The companies say it has been nearly two years since the first news stories revealed the scope of the NSA's spying, and that "now is the time to take on meaningful legislative reforms" that maintain national security but also protect privacy, transparency and accountability.

The Reform Government Surveillance coalition now counts Apple, AOL, Dropbox, Evernote, Facebook, LinkedIn, Microsoft, Twitter, Yahoo and Google among its members.

The group's principles are based on the idea of placing "sensible" limitations on government surveillance powers and introducing strong checks and balances when governments are granted the power to spy -- to prevent abuse and keep the concept of privacy intact. In addition, the group promotes transparency concerning government demands for data imposed on technology companies, as well as respecting the free flow of information across borders.
Congress Must Reform Our Surveillance Laws

On the Google Public Policy Blog, David Drummond, Chief Legal Officer, Google, states Congress Must Reform Our Surveillance Laws.
We have a responsibility to protect the privacy and security of our users’ data. At the same time, we want to do our part to help governments keep people safe. We have little doubt that Congress can protect both national security and privacy while taking a significant, concrete step toward restoring trust in the Internet.

Google has been working hard for the last two years to reform government surveillance laws, and we will continue to push for broader surveillance reforms in the months ahead.

We invite you to join us in asking Congress to enact surveillance reform by adding your name at google.com/takeaction.
Bill of Rights

As far as I am concerned, any law that does not pass muster with privacy restrictions in the Bill of Rights, should be done away with entirely.

Here's a refresher course on the Fourth Amendment to the United States Constitution, part of the Bill of Rights.
The right of the people to be secure in their persons, houses, papers, and effects,[a] against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

The Fourth Amendment was adopted in response to the abuse of the writ of assistance, a type of general search warrant issued by the British government and a major source of tension in pre-Revolutionary America.
Dear Congress

I find it galling that Republican hypocrites voted for the Patriot Act and any of its extensions. I believe the Patriot act should not be amended but rather abolished in entirety.

Thus, I am torn over half-measures that allegedly will do what is needed. Google says "We have little doubt that Congress can protect both national security and privacy while taking a significant, concrete step toward restoring trust in the Internet.

I have high doubts. Once rights are taken away, history suggests it is damn hard to win them back. The only question at hand is whether or not partial restoration of rights merits your consideration or not.

On the theory that half a loaf is better than none, but also with plenty of reservations, please consider  Google's Dear Congress Petition.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Last 10 Posts


Copyright 2009 Mike Shedlock. All Rights Reserved.
View My Stats