Walmart, Costco, US Bank Profit From Energy Credits in US; Carbon Tax Thrown Out By French Court

Inquiring minds are noting Court throws out Sarkozy's carbon tax.

France's new carbon emission tax, due to have gone into effect tomorrow, has been ruled illegal by the country's constitutional court because it exempted too many polluters.

The Conseil Constitutionnel struck down the tax on Tuesday because the exemptions breached ''the principle of [tax] equality''.

It estimated that 93 per cent of industrial emissions outside of fuel use, including those of more than 1000 of the country's most polluting industrial sites, would be exempt from the tax of €17 ($27) a tonne of emitted carbon dioxide.

The ruling is a blow for the President, Nicolas Sarkozy, as the measure was one of his flagship initiatives to cut emissions. It also leaves the Government with a €4.1 billion hole in its 2010 budget.

Meanwhile, the President of Brazil, Luiz Inacio Lula da Silva, has signed a law requiring that Brazil cut its projected greenhouse gas emissions by 39 per cent by 2020, meeting a commitment made at the Copenhagen climate change summit.

Winners, Losers, Inequality

The Conseil Constitutionnel made the correct ruling. It's clear to see what the policy was: handouts to 1000 favored industries at the expense of everyone else.

Walmart Wins Oregon Loses On Energy Credits

Please consider Walmart, others make money on Oregon's energy tax credits.

When Oregon started handing out jumbo tax subsidies for renewable energy projects two years ago, one of the biggest beneficiaries was also one of the world's richest corporations -- Walmart.

No, the retail giant hasn't branched to solar panels or wind turbines.

Instead, Walmart took advantage of a provision in Oregon's Business Energy Tax Credit that allows third parties with no ties to the green power industry to buy the credits at a discount and reduce their state income tax bills.

State records show Walmart paid $22.6 million in cash last year for the right to claim $33.6 million in energy tax credits. The cash went to seven projects, including two eastern Oregon wind farms and SolarWorld's manufacturing plant in Hillsboro. In return, Walmart profits $11 million on the deal because that's the difference between what it paid for the tax credit and the amount of its tax reduction.

The loser in the transaction is Oregon's general fund -- which pays for public schools, prisons and health care programs -- because the state is out the full $33.6 million in tax revenues.

Walmart isn't alone. An analysis by The Oregonian shows Costco and U.S. Bank, which also rank among the nation's top 200 wealthiest businesses, have made millions by buying up energy tax credits to cut their Oregon tax bills. Dozens of other companies and hundreds of individual Oregon taxpayers also have cut their tax bills by buying up the tax credits.

"It's so convoluted," says Eric Fruits, an adjunct economics professor at Portland State University who has studied Oregon's energy incentives. "You've got all these dollars swirling around. Everyone is trying to grab them as fast as they can."

Walmart, Costco and U.S. Bank, which top the list of energy credit buyers, shelled out a combined $67 million to avoid paying $97 million in Oregon income taxes.

Walmart and others are making money on projects that were closed, went belly up or never produced the energy or energy savings they initially claimed.

Gov. Ted Kulongoski and state energy officials say they recognize problems with the energy tax credits and are working to overhaul the program when state lawmakers convene for a short session in February. Among the targets of the overhaul is the pass-through option.

"The governor believes there's been a public value to the program," says Anna Richter Taylor, Kulongoski's spokeswoman. "That said, he also is very supportive of efforts to align the rate better with other public investment portfolios."

Insanity of Cap-And-Trade

Oregon thinks it knows how to fix the problem, but the whole idea of granting companies credits that they can trade is simply fatally flawed.

Walmart, Costoc, and US bank made millions for doing nothing and Oregon taxpayers got clobbered.

In Europe, the Cap-and-Trade Carbon Credit Extortion Scam In Full Swing.

The world's biggest polluters wanted the carbon cap so they could trade their permits (acquired for free), to other businesses who will have to buy them to expand.

Now some of those polluters are going to move to India anyway after extorting extra permits out of the EU.

Not only is the global warming data bogus and manipulated, the whole cap-and-trade program is now easily seen as nothing more than an extortion scam, a scam that has fittingly blown up in the face of the EU and UN clowns who created it (unless of course that was their intention all along).

Unfortunately, EU workers and taxpayers are the ones who are going to suffer over this, not the clowns who created this ridiculous scheme.

Such is the insanity of Cap-And-Trade. It creates a big stream of winners and losers out of thin air, with taxpayers being the most likely loser.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Plunder! How Public Employee Unions Are Bankrupting the Nation

Jack Dean at Pension Tsunami just emailed subscribers a note to watch Steven Geenhut, author of Plunder!: How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation on C-SPAN2 tonight at 10:00PM EST.

About The Program

Steven Greenhut takes a critical look at government workers and the unions that represent them. Mr. Greenhut argues that government employees, who receive salaries, benefits, and a level of job security that far outpace workers in the private sector, have become a huge drain on state and federal coffers.

About the Authors

Steven Greenhut, a former member of the Orange County Register's editorial board, is the director of the Pacific Research Institute's Investigative Journalism Center and News Bureau in Sacramento. He is the author of "Abuse of Power: How the Government Misuses Eminent Domain."

If you don't have access to BookTV (C-SPAN2) via your cable provider, you can watch it on your computer (Windows Media Player required) at CSpan2Live.

If you want to keep abreast of pension news, enter your Email address at Pension Tsunami and click subscribe. It's free.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Pension War In Ohio, Greedy Police and Fire Unions Ask For Still More

It is bad enough that police and firefighters beg for still more taxpayer money, the worst part is politicians are willing to go along with it. Please consider Pension reform fight has makings of a war.

Like it or not, lawmakers will be asked this year to overhaul the state’s public pension systems that serve 1.7 million Ohioans and cost local governments more than $4 billion a year.

It’ll be an epic struggle among powerful interest groups to determine how the burden of shoring up the pension systems is shared.

Teachers, cops and firefighters may be asked to work longer. Retirees will likely face higher medical costs. And taxpayers may be asked to chip in as much as $5 billion toward the pension systems, if lawmakers accept proposed increases from two of the state’s five public pension funds.

The Ohio Police & Fire Pension Fund and State Teachers Retirement System are asking for rate increases that, over the next five years alone, would cost local governments hundreds of millions of dollars.

State Sen. Kirk Schuring, R-Canton, described the viability of making taxpayers shell out more through higher employer contributions as “highly unlikely, probably impossible,” given the economic slump and the financial struggles local governments already face.

“This isn’t just putting a new coat of paint on the house” said Ken Thomas, a city of Dayton employee who chairs the Ohio Public Employees Retirement System board, which is proposing adding two years to the eligibility age for a full pension for its members. “This is re-doing the foundation.”

None of the proposed changes, however, call for following the private sector into 401(k)-type plans that might ease the burden on local governments and schools.

“The goal should be to continue the defined-benefit plan,” said state Rep. Todd Book, a Portsmouth Democrat who chairs the Ohio Retirement Study Council.

Opposition to raising employer contribution rates already has begun to surface. In Springboro, where multiple levy defeats have forced the district to close a school, cut back on busing routes, lay off workers and boost participation fees for extracurricular activities, the proposal is about as welcome as an H1N1 outbreak.

“The community already feels we compensate every employee in our school system wonderfully,” said Kelly Kohls, who was elected to the school board in November. “We’ve been very generous.”

Sensible Goals

Pray tell why should defined benefit plans be the goal? The goal ought to be to get rid of them. Is Todd Book watching his pocketbook or that of taxpayers?

It clearly is not the latter. Not another dime of taxpayer money should go to increasing employer contributions. Enough is enough. Taxpayers need to get rid of clowns like Todd Book.

Citizens of Ohio, dump Book.

Graft On Ohio Public Employees Retirement System Board

Take another look at the self-serving comment of Ken Thomas, a city of Dayton employee who chairs the Ohio Public Employees Retirement System board: “This isn’t just putting a new coat of paint on the house. This is re-doing the foundation.”

Clearly Thomas' statements are nothing but complete self-serving pomp. Adding two years to the eligibility of a full pension does not eliminate any structural problems. To re-do the foundation one would have to

1) Eliminate defined benefit pension plans
2) Lower the assumed benefits
3) Cap employer contributions
4) Make the plans accountable for pension assumptions, not taxpayers

The reason change is so difficult is

• Pompous clowns like Ken Thomas (acting in their own best interests) dominate pension boards
• Legislators unwilling to stand up to unions are on the public gravy train themselves

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Email From Afghanistan on "Waste of War"

On New Years' eve I exchanged emails with "BP", a soldier in Afghanistan regarding Vermont State Employees Union Votes For 3% Pay Cut.

"BP" just pinged me again with ...

You really need to do something on the waste of this war. Foreign contractors are everywhere you look.

KBR must have 4 civilians for every military member. There are a few American contractors but most seem to be Foreign nationals. Philippine nationals are everywhere. I'm sure they get paid peanuts so the KBR shareholders get their return.

56,000 More Contractors Likely

Please consider Up to 56,000 more contractors likely for Afghanistan, congressional agency says.

The surge of 30,000 U.S. troops into Afghanistan could be accompanied by a surge of up to 56,000 contractors, vastly expanding the presence of personnel from the U.S. private sector in a war zone, according to a study by the Congressional Research Service.

CRS, which provides background information to members of Congress on a bipartisan basis, said it expects an additional 26,000 to 56,000 contractors to be sent to Afghanistan. That would bring the number of contractors in the country to anywhere from 130,000 to 160,000.

The CRS study says contractors made up 69 percent of the Pentagon's personnel in Afghanistan last December, a proportion that "apparently represented the highest recorded percentage of contractors used by the Defense Department in any conflict in the history of the United States."

Immense Waste In Unwinnable War

Thanks "BP". Yes the waste of this war is immense. One of the best pieces I have seen lately mentioning the war is from James Howard Kunstler's Forecast 2010.

Geopolitics

The retracement of oil prices in 2009 took place against a background of relative quiet on the geopolitical scene. With economies around the world sinking into even deeper extremis in 2010, friction and instability are more likely. The more likely locales for this are the places where most of the world's remaining oil is: the Middle East and Central Asia. The American army is already there, in Iraq and Afghanistan, with an overt pledge to up-the-ante in Afghanistan.

It's hard to imagine a happy ending in all this. It's increasingly hard to even imagine a strategic justification for it. My current (weakly-held) notion is that America wants to make a baloney sandwich out of Iran, with American armies in Iraq and Afghanistan as the Wonder Bread, to "keep the pressure on" Iran. Well, after quite a few years, it doesn't seem to be moderating or influencing Iran's behavior in any way.

Meanwhile, Pakistan becomes more chaotic every week and our presence in the Islamic world stimulates more Islamic extremist hatred against the USA. Speaking of Pakistan, there is the matter of its neighbor and adversary, India. If there is another terror attack by Pakistan on the order of last year's against various targets in Mumbai, I believe the response by India is liable to be severe next time, leading to God-knows-what, considering both countries have plenty of atom bombs.

Otherwise, the idea that we can control indigenous tribal populations in some of Asia's most forbidding terrain seems laughable. I don't have to rehearse the whole "graveyard of empires" routine here. But what possible geo-strategic advantage is in this for us? What would it matter if we pacified all the Taliban or al Qaeda in Afghanistan? Most of the hardest core maniacs are next door in Pakistan.

Even if we turned Afghanistan into Idaho-East, with Kabul as the next Sun Valley, complete with Ralph Lauren shops and Mario Batali bistros, Pakistan would remain every bit as chaotic and dangerous in terms of supplying the world with terrorists. And how long would we expect to remain in Afghanistan pacifying the population? Five years? Ten Years? Forever? It's a ridiculous project.

What's more, our presence there seems likely to stimulate more terror incidents here in the USA. We've been supernaturally lucky since 2001 that there hasn't been another incident of mass murder, even something as easy and straightforward as a shopping mall massacre or a bomb in a subway. Our luck is bound to run out. There are too many "soft" targets and our borders are too squishy. Small arms and explosives are easy to get in the USA. I predict that 2010 may be the year our luck does run out. ...

No Strategic Justification

Kunstler is correct. There is no strategic justification; the war is not winnable; and we do not even know where the major threat is.

How many trillions have we wasted on "Star Wars" initiatives? Yet since the end of the cold war, the big threat never was nor ever will be, countries firing missiles at us. The big threat to the US so far has been improper security procedures on airplanes and schools.

Nut cases are everywhere. Proof enough can be found in the US when Timothy McVeigh blew up a building, and Eric Harris and Dylan Klebold were responsible for the Columbine High School massacre.

It's important to remember "terror" is a method. A war on terror makes no sense because one cannot win a war on a method.

Externally, the most important thing to note is the longer we meddle in the internal affairs of other countries the more enemies we make.

In spite of the fact that Iraq was never a strategic threat to the US, we wasted $694 billion there as noted in Cost of Iraq war will surpass Vietnam. Add in future medical liabilities and money hidden elsewhere and the cost of Iraq easily exceeds $1 trillion. We can thank idiot Bush and Congressional morons for that mess.

Now Obama is about to throw more money down the Afghanistan black hole. Like Iraq, Afghanistan is another Vietnam. It will not cost as many lives but it is just as stupid and economically will cost as much if we stay for a few more years.

Why Do They Hate Us?

War mongers like to tout "they hate us for our freedoms". Well, no they don't. If that was the reason, they would hate New Zealand, Canada, Australia, Germany, Iceland, and dozens of other countries.

They hate the US because ...

• We have troops in 150 countries
• We support corrupt regimes
• We needlessly meddle in the internal affairs of other countries
• We have a one-sided policy on Israel
• We are hypocrites on free trade and human rights
  

The more we keep troops all over the world, the more enemies we make. Eventually it will bankrupt us. The only sane solution is to declare the war won and leave, not just Afghanistan, but 149 other countries as well.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Iceland's Parliament Coerced Into Offering Bribes, Hoping For Quick Entry Into EU

British and Netherlands savers lost $5 billion when Iceland's banks collapsed during the financial crisis. In a controversial vote, hoping for quick entry into the European Union, Iceland parliament approves Icesave repayment bill, a bailout of those foreign savers.

Icelanders Protest Vote

Please consider Icelanders petition president to veto Icesave bill.

Nearly a quarter of Icelandic voters have signed a petition asking their president to veto a bill on repaying $5 billion lost by British and Dutch savers when the island's banks collapsed, organizers said on Saturday.

The petition also called on President Olaf Ragnar Grimsson to call a referendum on an issue which has aroused resentment that taxpayers are being left to pay for banks' mistakes.

Earlier this week parliament approved the amended bill to reimburse Britain and the Netherlands for the amount, which was lost by savers in both countries in 2008 who deposited funds in high-interest "Icesave" online savings accounts.

But the president has yet to sign the bill into law and 56,089 people, who represent 23 percent of the island nation's electorate, have signed the petition, the organizers said.

The longstanding dispute has held up payment of some aid funds from international lenders, made it difficult to relax capital controls imposed at the height of the financial crisis, and clouded Reykjavik's chances of joining the EU.

The UK and Netherlands are guilty of coercion and the IMF is a willing participant as well. Iceland's parliament is too willing to pay this bribe.

The citizens of Iceland have it correct. British and Netherlands savers were seeking higher interest rates and speculating in currency plays by depositing funds into Iceland banks.

This is really an extremely simple matter. When you chase yield making risky bets on interest rates in a foreign currency, and that risk blows sky high as it eventually always does, someone has to pay. That someone ought not be the citizens of Iceland.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Colorado's PERA "2/2/2" Funding Plan Hopelessly Unsound

Colorado's Public Employees Retirement Association (PERA) is currently only 70% funded. Projections show it will be less than 50% funded by 2012. To get the fund back in shape PERA officials offer plan for sustainability.

PERA officials last week presented their proposal to rescue the ailing retirement fund to the Legislative Audit Committee.

The draft legislation, called 2/2/2 Plus, includes a 2 percent increase in employee contributions, a 2 percent increase in employer contributions, and a 2 percent cap on cost of living increases for retirees.

More than 438,000 people belong to the Public Employees Retirement Association, which faces a multi-billion-dollar deficit over the long-term because of high payouts and stock market instability. PERA includes four independent trusts covering different segments of the labor market: judicial, state, schools and local government workers. In January, Denver Public Schools will be added as a fifth division.

"Change has to occur to ensure the system is sustainable to all of our members," Meredith Williams, PERA's executive director, has said.

According to the plan, solvency would be reached in 30 years. Previously, the association operated on a 60-year amortization plan.

To reach that goal, return on investments would be reduced to 8 percent, from the current 8.5 percent.

The increase in employer contributions would begin in 2013 and continue through 2017, while the employee increase would begin in 2014 and run through 2017. Cost of living increases (COLA) would be capped at 2 percent and would be dependent on the Consumer Price Index. (The index, CPI-W, is generally used to determine cost of living raises for labor contracts.) Currently, the COLA raise for members is 3.5 percent annually.

Cadillac Of Retirement Funds

The Greeley Tribune discusses the "2/2/2" proposal in PERA plan aims to keep fund solvent.

Rightly so, many consider the Colorado Public Employee Retirement program the Cadillac of retirement funds.

Much like Social Security, PERA can't operate business as usual and continue to be solvent. The four funds PERA manages — for state, public schools, local government and judicial employees — all will eventually run out of money in the next 30 years if something doesn't change.

After months of meetings and work sessions, staff members and the board of directors for PERA has announced a plan to make the fund solvent for the foreseeable future.

We recognize this plan isn't perfect. For one, it puts a financial burden on public entities already struggling to balance budgets. Having to find the additional contributions to PERA will make this even more difficult, and certainly could mean other programs and services will suffer. That is a big concern.

Some employees have also balked at having their contributions increase, and for some in the lower income brackets, this may create a bit of a hardship.

Still, overall we believe the PERA plan is prudent. First, it spreads the additional costs around between employees and beneficiaries, including future retirees who will not see the automatic cost of living increases in their benefits that they enjoyed in the past.

Most important, though, the proposal will, under the best financial predictions, keep the fund solvent and insure that future retirees now paying into the system will see their benefits when they decide to stop working. With the current system, that might not happen.

We hope our state legislators will seriously consider these changes to PERA. We believe it will protect public employees in the long run, and still give retirees the Cadillac of retirement programs. Maybe not an Escalade, but still pretty close to a Seville.

The first question to ask is "Why the hell do public employees remotely deserve a Cadillac plan when no one in private industry gets one?"

The "2/2/2" plan forces employers (read taxpayers) to pony up still more so that public workers get Cadillacs while private plans get Pintos if they get anything at all.

Without a doubt, defined benefit pension plans need to be killed before they kill the taxpayers.

Plan Unfair And Financially Unsound

It is galling for anyone, especially the Tribune to think this plan is fair. Moreover, the plan is still financially unsound.

Here are some slides from the November 2009 PERA Legislative Audit Presentation.



click on any chart for sharper image

There are four independent trusts covering different segments of the labor market: judicial, state, schools and local government workers. In January, Denver Public Schools will be added as a fifth division.

Here are what two of the funds look like right now.


At a 7% rate of return the State Division will be completely out of money by 2026. At an 8.5% rate of return the money would run out by 2029.



At a 7% rate of return the School Division will be completely out of money by 2029. At an 8.5% rate of return the money would run out by 2033.

The above charts reflect the current situation.

Based on the proposals and an 8% return here are the new projections.





Even with those proposals, the plans are woefully underfunded all the way until 2036 on the School Division and as far as the eye can see on the State Division.

Unfortunately the new projections do not show what happens at 7% or 6% but it for sure will not look pretty.

Taxpayers of course are on the hook for any decencies.

Unfortunately, an expected rate of return of 8% is not realistic at all, especially for the next decade. Unemployment is going to remain high, the odds of another stock market crash area high, the odds of a double dip recession are high, and boomer demographics ensure that spending and thus tax revenue as well as stock market earnings are not going to return to 2006 levels of growth.

The stock market right now is one of the most overvalued in history. It only looks good in comparison to the 2007 S&P valuation or the 2000 Nasdaq valuation. The S&P has been flat for a decade and it is quite possible if not likely it will be flat at best for another 5-10 years.

Here is another way of looking at it. Ten year treasuries are yielding under 4%. It will take a lot of excess risk to remotely come close to 8% returns.

My Proposal

1) Kill defined benefit plans for all new employees
2) If plan assumptions are not met, the plan participants, not taxpayers take the hit
3) Taxpayers add 0% additional funding. Enough is enough.

Point number two will allow whatever ridiculous assumptions PERA wants to make. However, I would recommend PERA assume something along the lines of 5-6% expected rates of return than 8%.

The "2/2/2" proposal is not remotely a down payment on what needs to happen. This plan should not be approved. It is a joke that addresses no long-term issues.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Vietnam Halts Gold Trading; Global Imbalances Mount

Citing speculation and excessive leverage Vietnam to put an end to gold trading.

January 1 2010

Vietnam has ordered all gold trading floors to close by the end of March, putting an end to a business which turns over $1bn a day but which the government feared was spinning out of control.

“Both the owners of the gold-trading floors and traders are doing their transactions on a fragile foundation that lacks legal, economic and technical frameworks and knowledge,” the government said in a statement.

The order also bans using overseas accounts, but does not affect jewelery or retail gold sales.

The government said it was particularly concerned that some investors had been drawn into overleveraging their positions by low interest rates and the ever-increasing price of gold , which has risen from $660/oz when the first trading floor was started in 2007 to almost $1,100/oz today.

The government said that in some cases, investors had only been required to put up 7 per cent of the value of their portfolio.

The regulation will affect around 20 gold trading floors, but it is unclear if the government is intending to re-write the regulations and allow the floors to re-open or if the move is long-term.

The trade has become a lucrative source of income for many of the banks and trading houses which have opened the exchanges, and the ban could hit profits. But analysts say it could free up liquidity that might flow back into the stock markets, lifting the index.

Dong Devalued

In November, Vietnam devalues the dong and raises rates

November 26 2009
Vietnam devalued its currency by 5.4 per cent against the dollar yesterday and raised interest rates by a full percentage point in an effort to cut inflation and underpin the beleaguered dong.

The dong has come under pressure recently as inflation started climbing and domestic demand, driven by the country's $8bn stimulus programme, drove the current account deficit to close to $2bn a month.

"The decision poses further challenges to the central bank's credibility," said Tai Hui, Standard Chartered Bank economist. "The risk is that local investors will pay little attention to official comments going forward, which may exacerbate devaluation pressure on the currency."

For weeks, the government had insisted that it would not give in to pressure on the dong. "Vietnam will not devalue our currency," Nguyen Minh Triet, president, said in Singapore last week. "We will take cautious steps on our monetary policy."

Downward Pressure On The Dong

Please consider Dong weighed down by deficit

December 1 2009

An initial strengthening of the dong on the black market from 19,800 to the dollar to 19,100 has been followed by renewed weakness, with the dong trading at 19,500 on Tuesday, substantially outside the permitted trading band, suggesting that at best the jury is still out on the government’s efforts to put a floor under the currency.

The State Bank of Vietnam made its move after a significant increase in the downward pressure on the dong. The immediate cause was a spike in the gold price: Vietnam is the world’s eighth-largest buyer of gold and when the price started to rise, Vietnamese consumers sold dong to buy in. At one point the precious metal hit $1,362 an ounce, a premium of more than $260 per ounce on the London market price of the time, before falling back in line when the government lifted import restrictions .

Vietnam Strives To Limit Inflation To 7%

Inquiring minds are reading Vietnam Bank to Keep Benchmark Rate at 8%

Vietnam’s central bank will keep the benchmark interest rate at a one-year high of 8 percent in January to help strengthen the economy.

The central bank unexpectedly increased the base rate to 8 percent last month amid signs of quickening inflation, after holding it at 7 percent for 10 months to revive the economy. The government also subsidized corporate borrowing and reduced tax payments to boost gross domestic product.

Average inflation has been below the government’s target of 7 percent this year, according to an announcement on its Web site yesterday. The consumer price index rose 6.5 percent in December, the fastest pace since April, the General Statistics Office said yesterday.

‘Acceptable Pace’

“Inflation is quickening, but still at an acceptable pace, so we don’t need to raise the base rate right now,” Le Xuan Nghia, Hanoi-based vice chairman of the National Financial Supervision Commission, and former head of the central bank’s department for banking strategy, said by telephone today. “It’s also better for businesses.”

Wrong To Be Long The Dong

Inflation of 7% is certainly not better for business.

Moreover, halting gold trading will not solve anything. All it will do is increase the black market price of gold in the Dong, already at a premium.

Global Imbalances Mount

• Global imbalances are cropping up like weeds in places like Greece, Spain, Vietnam, Iceland, Vietnam, Latvia, and Lithuania.
• There are massive property bubbles in China, Canada, the UK, and Australia.
• Japan is in a foolish fight against deflation and sinking further in debt
  
• Commercial real estate in the US is on the verge of bringing down hundreds of regional banks.
• Cities in the US are under massive pressure because of unsustainable pension plan promises.
• Global terrorism is on the rise
  

How long this mess hangs together without a huge crisis in a major currency is the question everyone should be asking. Sadly, most are oblivious to the widening structural cracks.

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