Sovereigns are in a peck of trouble

Euromoney's sovereign risk index is rising. This is surprising because easy money usually reduces sovereign risk. Special factors also come into play, like commodity prices and politics (e.g. Ukraine and Venezuela.)

The strong dollar is the unmentioned culprit in this analysis as many of these countries have US$ debt coming due.

By the way, the Russian Central Bank has just cut interest rates, bringing to 14 the number of CB who have eased policy in January. Would it be better to describe this as an avalanche or a tidal wave?

Mind the Gap: Strong dollar hollows out US industry

Production will continue to move offshore.

Ronald McDonald says US$ overvalued against all major currencies

In July 2014, the US$ was still fairly valued against the GBP, the euro, the Aus$, and the Can$. Now, however the US$ is overvalued in relation to every signficant economy in the world save Brazil.

It is no surprise CAT reported bad earnings today. The currency effect produced revenue declines everywhere in the world outside of North America. We should expect the same in the future from other global companies.

US economy "totally different" from the others

Chinese official explains why they won't follow the US lead in monetary policy. (The US had apparently been suffering from "insufficient money supply.")

Bubble, Bubble bonds and bunds

Interesting price moves in Japan and Germany.

Latest IMF projections show good global growth

Gloom is widespread, but if the IMF is correct the world will do well in 2015 and 2016.

My nomination for the "Most Creative Use of a Fiat Currency" Award

Hats off to these two Indian shopkeepers.

The West Virginia Economic Miracle

Question:  Once everyone is on permanent disability, who will deliver the checks?

The only state where less than half its civilians work
By Steve Goldstein

Published: Jan 13, 2015 11:32 a.m. ET
Not shown: Alaska has a participation rate of 63.4%, and Hawaii has a participation rate of 59.4%.



WASHINGTON (MarketWatch) — West Virginia quietly passed the ignominious milestone of having less than half of its adult, civilian population in the workforce in November.

State data compiled by the Labor Department shows that West Virginia’s civilian labor participation rate has fallen to 49.8%, from 50% in October. The national rate in December was 62.7%.

The Mountain State is the only state in the history of the series, which goes back to 1976, to have fallen below 50%, though Mississippi at 50.8% isn’t far behind.

The troubles that have befallen West Virginia have been well publicized, notably the diminished demand for coal.

At 6.3%, West Virginia doesn’t have close to the worst state unemployment rate, with Mississippi, California and Rhode Island each having jobless rates above 7%, and 11 other states with unemployment rates in the 6% range that are worse. But it’s a state where many have given up trying to find a job. At 17.6%, West Virginia has the highest percentage of working-age people with disabilities, above the national average of 10.4%, according to 2012 data.

Beyond the troubled economic environment — and, in part, because of it — West Virginia also has an older population. At 41.9, West Virginia has the fourth-highest median age, according to Census Bureau data from 2013.

On the other end of the spectrum, the highest participation rate belongs to North Dakota, in the midst of a fracking revolution that has drawn workers to the state.
State Participation rate (%) Unemployment rate (%)
Alabama 52.2 6
Alaska 63.4 6.6
Arizona 55.5 6.8
Arkansas 53.9 5.8
California 58 7.2
Colorado 64.9 4.1
Connecticut 61.7 6.5
Delaware 57.8 6
District of Columbia 64.5 7.4
Florida 57 5.8
Georgia 57.6 7.2
Hawaii 59.4 4
Idaho 60.4 3.9
Illinois 60.7 6.4
Indiana 60 5.7
Iowa 67.4 4.3
Kansas 65 4.3
Kentucky 54.6 6
Louisiana 57.2 6.5
Maine 60.8 5.7
Maryland 62.2 5.6
Massachusetts 61.5 5.8
Michigan 56.2 6.7
Minnesota 67.3 3.7
Mississippi 50.8 7.3
Missouri 61.1 5.6
Montana 61.3 4.3
Nebraska 68.7 3.1
Nevada 57.9 6.9
New Hampshire 66.1 4.1
New Jersey 60 6.4
New Mexico 54.2 6.4
New York 56.7 5.9
North Carolina 56.6 5.8
North Dakota 69.5 2.7
Ohio 59.8 5
Oklahoma 57.9 4.4
Oregon 57.6 7
Pennsylvania 59 5.1
Rhode Island 60.2 7.1
South Carolina 54.5 6.7
South Dakota 67 3.3
Tennessee 54.6 6.8
Texas 61.8 4.9
Utah 65.4 3.6
Vermont 65.3 4.3
Virginia 62.5 5
Washington 59.5 6.2
West Virginia 49.8 6.3
Wisconsin 64.9 5.2
Wyoming 65.2 4.5





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How to manipulate your currency for fun and profit

California Dreaming

It is interesting that one third of California's population is now destitute enough to qualify for free health care under Medi-Cal. If my understanding is correct, this does not include those receiving subsidies but paying something.

It's a difficult situation. Our health care financing system was nonsensical before Obamacare and remains so.

This is in addition to the care for the elderly, which was not part of the reform. That system is collapsing as well.


Los Angeles Times: California budget ills

The wages of sin: Does the head of Belgium's central bank have the toughest job in the eurozone?

The rise in the dollar is another nail in the coffin of US manufacturing

The yen has dropped 50% against the dollar.  The euro and the pound are down 15%-20%.  Consumer spending is reviving in the US, the consumer will is buying more foreign manufactures.  (This chart is from Ed Guay of Wintonbury Risk Management.(