OK, so back in 2004 Great Britain said it would welcome its Eastern EU comrades to come and enjoy the right to work and to benefit from social and medical programs. The Labour party government estimated somewhere between about 25 and 65 thousand people would show up. Turns out it was more like 300 to 400 thousand. By 2011, the Polish-born population of Great Britain stood at 521,000 and even by conservative estimates is one of the largest “Roma” (apparently “Roma” is a PC version of “Gypsy”) populations in Europe. Fast forward to today, where “the lifting of labor restrictions on Wednesday for Bulgarians and Romanians in nine European Union countries, including Germany, France and Britain, was greeted as both an opportunity and a threat, touching off fear among some about unchecked immigration from Bulgaria and Romania, two of the poorest states in Europe.” So the EU is being all Gypsyphobic right now. To make things even worse for our poor xenophobic brothers across the sea, Latvia joined the EU yesterday. However, anti-EU sentiment is alive and well in Latvia, so the government decided not to hold a referendum vote on the matter and just push it through instead. And Latvians aren’t the only ones: “The Czech Republic, Hungary and Poland have all pushed back their target dates for euro zone membership until near the end of the decade in the face of low public support.” Consider these graphs when you think about European Union gypsy assimilation and GDP growth: The Czech Republic has one of the lowest unemployment rates in Europe; Latvia, Romania and Bulgaria all have less than half public debt as % of GDP than France or Germany; and Latvia leads all European countries for estimated 2014 GDP growth at “4.0 and above” with Poland, Romania, Slovakia and Lithuania all estimated to outpace countries like Luxembourg, Germany, France, Belgium etc. Meanwhile, Mario Draghi is wondering why we all just can’t get along and lend to each other at the same rate? “Goldman Sachs’ interest rate divergence indicator (sounds fancy) measures cross-border variations in interest rates charged by eurozone banks on a variety of business loans. The indicator hit a high of 4.7 percentage points in May 2013 and fell to 3.9 in October, the lowest reading since September 2011.” But don’t worry, Draghi has a solution: “The ECB is also encouraging greater use of “securitisation” – the packaging up of loans to redistribute among investors – as a way of improving credit flows to job-creating small – and medium – sized companies in the eurozone periphery.”
Making More For Less
13 States are ringing in the new year by raising their minimum wage (alt): “The centre of the push to increase minimum wages at the state level is in the US northeast, where New York, New Jersey, Connecticut and Rhode Island are making the move, cheered by Democrats and liberal groups but opposed by many Republicans and business groups. At least nine other US states will also see minimum wage increases take effect automatically because of cost-of-living adjustments.” This will be closely monitored by the Obama administration as Democrats and Republicans in Washington, D.C. are probably getting ready to do nothing over an effort to increase the federal minimum wage ($7.25/hour; 21 states now pay their workers a wage higher than this). Washington State still has the highest minimum wage in the country ($9.32/hour) but for those living in SeaTac it ain’t good enough: workers in hospitality and travel (1,600 total) have seen their minimum wage increase to $15 while airport workers (4,700) were denied the new wage increase by Judge Andrea Darvas of King County last Friday. People seem to be pretending that SeaTac is more than just an airport and that a minimum wage increase for its citizens is mostly an increase for the people stuffing burritos at the airport. Meanwhile, a University of Chicago Professor is forecasting shorter workweeks for private employees in 2014 since “fiscal policy is now switching from penalizing part-time work to rewarding it.” As the government is ending its long-term unemployment benefits this week, short-term benefits are due to continue and with Obamacare in place fewer people will need a full-time job to get access to healthcare. Moreover, Obamacare is now penalizing companies that don’t offer health insurance to employees working more than 30 hours/week.
Colorado Stoners, Mexican Cartels
Colorado unveiled the first fully legal marijuana industry yesterday with no prescription required and no regulation of cannabis production. Needless to say, stoners are thrilled (and so are people writing this stuff). I really like this quote, though: “This is quality stuff in a real store. Not the Mexican brick weed we’re used to back in Ohio.” Which is a nice segue into this: a Mexican cartel is “diversifying into other businesses, became so successful at exporting iron ore to China that the Mexican Navy in November had to move in and take over the port in Lazaro Cardenas, a city that has become one of the gang’s main cash generators.” So, the Mexican cartels’ weed business is probably shrinking thanks to the surprising efforts by stoners in Colorado and Washington to get off the couch and vote, but Mexican cartels are kinda the opposite of your stereotypical pothead. They’re more like free market sharks who will rip out your throat to make some money, preferably illegally so.
Fantastic Headlines: Walmart Recalls Donkey Meat in China
Labor Department: “Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 339,000…The four-week moving average for new claims rose 8,500 to 357,250…A total 4.46 million people were receiving benefits under all programs in the week ended Dec. 14. But with benefits for more than a million long-term unemployed Americans having expired on December 28, that figure is set to fall sharply in the coming weeks.”
Markit: “U.S. Manufacturing Purchasing Managers Index rose to 55.0 last month, beating November’s 54.7 reading and an initial December estimate of 54.4…A solid increase in output, for which the index rose to its highest mark in 21 months of 57.5 from 57.4 in November, boosted growth in the sector and increased demand for plants and machinery.”
HSBC Holdings Plc and Markit: Chinese Purchasing Managers’ Index “fell to 50.5 from 50.8 the previous month,” which some see as confirming their belief that growth momentum in China has peaked and will continue to slow.