Tag: news

In the aftermath of yesterday’s 3 Year auction, which was nothing to write home about except for the surge in Indirect demand (and corresponding plunge in Direct take down), the Treasury just priced it latest soon to be POMO-ed 10 Year paper, $24 billion of it to be exact with a couple of reopenings scheduled in the near future, at a closing yield of 2.795% which was inside the 2.801% When Issued at 1 pm indicating solid demand dynamics during the auction process. That said, the Bid to Cover of 2.54 was well below both the January 2.68, and the TTM average of 2.69, and in fact was the lowest since the 2.44 print from last August. The internals were more solid, as Dealers took down 34.1%, below the 38.4% TTM average, while Indirects – like yesterday – soared to 49.7% of the final allocation, the highest since June’s 51.7%. This means that Directs were left with 16.2% of the auction, or just below the 19.8% average. As a result of the auction failing to tail, the Treasury complex popped modestly higher in the aftermath of the announcement, although this bullish sentiment may not last unless DE Shaw links up its bond buying algo to the USDJPY to match its SPOO buying “logic.”

And now we watch as Dealers flip their allotments right back to the Fed in the comding days.

via Zero Hedge http://ift.tt/1bN3idG Tyler Durden

Submitted by Pater Tenebrarum via Acting-Man blog,

Recently debates over minimum wage laws have flared up again. The starting point was president Obama’s State of the Union speech, in which he announced that he would push through a higher minimum wage (among other things) regardless of the objections anyone in e.g. Congress might have.

…

There can actually not be any controversy over the basic economic laws involved, and yet the debate continues to be revived again and again. The promoters of labor market intervention are certainly not above employing “outrageous political statements dressed up as economic theory” as Caroline Baum has pointed out.  As an aside, Ms. Baum cites a number of empirical economic studies in her article that thoroughly debunk the idea that wages are magically exempt from the law of supply and demand, but as a matter of fact, no such studies are required to explain the economic effects of instituting minimum wages.

Institutional unemployment will be the inevitable result, and all that is needed to prove this is economic logic. There is no quantum theory of employment according to which cause and effect are only tentatively ascertainable. No empirical testing of a ‘minimum wage hypothesis’ is necessary to establish what the effects of the policy will be.

…

How to Properly Think About the Problem

Minimum wage laws invariably create institutional unemployment, hit the lowest skilled workers (and hence the poorest members of society) the hardest and infringe on people’s freedom to enter into contracts. After all, a low-skilled or unskilled worker who wants to work for less than the minimum wage is no longer allowed to offer his services at a price the market will bear.

There is a very simple and effective way of demonstrating that the pro minimum wage arguments are flawed. Consider the president’s proposal from the SotU speech:

“Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour.”

One thing we were immediately wondering about was why no-one stopped to ask: “Why only nine dollars per hour? Why not ten? Or eleven? Wouldn’t that be even better?”

It would be a very good question and we’d be extremely curious to hear the answer. Indeed, for those earning the minimum wage, $9 must surely sound like a better deal than $7.50. But $10 would sound even better and $11 even more so. So why does the president not want to impose a raise to $10 or $11?

Obviously, the only thing that can possibly stand in the way of an even bigger increase in the minimum wage is some vague recognition, even if it only exists on a subconscious level (or is not admitted to), that economic laws do indeed exist. The ‘good deal’ would turn into a very bad deal if people were to begin losing their jobs left and right because keeping them employed had become uneconomic.

In fact, it is easy to test the limits of the belief in the efficacy of minimum wage laws to raise the standard of living by proposing some obviously absurd number. After all, if $9 is better than $7.50, $10 is better than $9, and $11 better than $10, then why not go all the way and raise the minimum wage to $100 or $1,000?  Surely almost everyone would regard such a proposal as absurd – at which point it would undoubtedly be highly illuminating to hear the supporters of minimum wage laws explain why exactly it would be absurd.

Lastly, often pro-labor type legislation of this sort is actually a bit of a political trick, designed to pull the wool over voters’ eyes (mind, we have not done any calculations or considered any studies on the $9 demand specifically). Since it is not possible for governments to wave a magic wand that suspends economic laws, one will often find that the height of a proposed new minimum wage is in the vicinity of what is already paid in the marketplace for low-skilled labor, due to a combination of inflation effects and rising productivity as a result of capital accumulation.  After all, businesses cannot simply offer any arbitrary price for labor, contrary to what many leftists seem to think. Labor remains a scarce resource for which businesses must compete.

So while it is certainly not possible to pay absurdly high prices for unskilled or low-skilled labor, it is also not possible to offer absurdly low wages, as one’s offers must be competitive.

via Zero Hedge http://ift.tt/1iPlvfF Tyler Durden

In what has to be the most surreal “news” of the past 24 hours, we learned that Spain, caught in the vice of an unprecedented historic depression, endless “recovery” propaganda notwithstanding, and Turkey, the country whose currency crashed to record lows against the dollar a few short days ago and whose government has been defending itself from a tsunami of corruption allegations and busy firing all the judges who dare to voice disagreement with PM Erdogan, have decided to jointly build … wait for it … an aircraft carrier.

According to Bloomberg, the proposed ship will be similar to Spain’s Juan Carlos I aircraft carrier, Turkish PM Recep Tayyip Erdogan says in Ankara during a news conference with Spanish counterpart Mariano Rajoy, in which Rajoy repeated that Spain remains a big supporter of Turkey joining the EU even if Germany has repeatedly (and will continue to) say “nein.”

Erdogan added  that Spain’s Navantia and Turkey’s Sedef companies reached agreement on the project.

The PM also said that the ship will be built at Istanbul’s Tuzla dockyard, and will be a “strategic” asset for Turkey.

We can only assume that when it comes to epic, and epically idiotic, Keynesian boondoggles, Spain and Turkey have decided to take the torch from the US where two years ago we suggested that in order to “boost growth” the US should build an $852 quadrillion death star, an idea which subsequently got all the way to the petition stage and received a formal response from the US government.

However, before the whole demented project comes crashing and burning, we will read many articles about the thousands of jobs created and needed to build the carrier: something.

The only thing that was not clear is what the proposed name of the ship is. We propose: Distraction I.

via Zero Hedge http://ift.tt/1bXsEZE Tyler Durden

We previously highlighted just how serious the situation was in Ukraine – and Victoria Nuland’s FUBAR comments and clear US manipulation did nothing to calm matters – but today’s news (via Ria Novosti) suggests things are escalating rapidly. Alexander Lobodenko – a 34-year-old district court judge who recently sentenced several political protesters to house arrest has been shot dead.

Via Ria Novosti,

A Ukrainian judge who recently sentenced several political protesters to house arrest has been shot dead by unknown attackers, police said Wednesday.

 

Alexander Lobodenko, a 34-year-old district court judge, was shot several times in the back by two assailants on a street near his home in central Ukraine late Tuesday night, the country’s Interior Ministry said.

 

One of the bullets grazed his spine, according to a statement on the Kremenchug district website, and Lobodenko died in intensive care at about 2 a.m. Wednesday.

 

Police have opened a criminal case into the death and said that Lobodenko was likely killed as a result of his judicial work. They did not speculate about which of the judge’s decisions may have motivated the attack.

 

One of Lobodenko’s most recent rulings, according to the Ukrainian newspaper Telegraf, sentenced two pro-European activists on January 28 to two months of house arrest.

 

The men had tried to break into the city hall building during a rally in Kremenchug days before, in a local instance of a broad anti-government protest movement that has engulfed Ukraine for the last two months.

Meanwhile, investors are increasingly of the view that Ukraine will need to devalue by at least 20% further…

Ukraine is key candidate among CIS countries for further devaluation, Sergey Dergachev, who helps oversee $9 billion as a portfolio manager at Union Investment Privatfonds in Frankfurt, said by e-mail.

 

Hryvnia to devalue by “at least” 20% vs dollar in 3-6 mos.

 

“Ukraine has still a very overvalued FX rate, and Ukraine has only bought some time with the introduction of capital controls last week, since they do not really fix the macroeconomic imbalances”

 

Move by Kazakh authorities yday to devalue the currency is “clear signal to Ukraine that current muddle through of strong UAH defense is not sustainable”

via Zero Hedge http://ift.tt/1lD9FpY Tyler Durden