Syriza could win outright majority as Greece rejects austerity

Greece's leftwing Syriza appeared on course to trounce the ruling conservatives in Sunday's snap election and could win the absolute majority it wants to fight international creditors' insistence on painful austerity measures.

Syriza was on course to win between 149-151 seats in the 300 seat parliament, with 36.5 percent of the vote, almost nine points ahead of the conservative New Democracy party of Prime Minister Antonis Samaras, according to interior ministry projections, based on a partial count of the vote.

His expected victory raises the prospect of an immediate standoff with German Chancellor Angela Merkel's government and could raise questions over distribution of the next tranche of more than 7 billion euros (5.2 billion pounds) in outstanding international aid Greece needs in the next few months.

Tsipras has promised to renegotiate a deal with the European Commission, European Central Bank and International Monetary Fund "troika" and write off much of Greece's 320 billion-euro debt, which at more than 175 percent of gross domestic product, is the world's second highest after Japan.

Greece, unable to tap the markets because of sky-high borrowing costs, has enough cash to meet its immediate funding needs for the next couple of months but it faces around 10 billion euros of debt repayments over the summer.

Without fresh cash, it will be unable to meet the payments, raising the spectre of an exit from the euro.

http://uk.reuters.com/article/2015/01/25/uk-greece-election-idUKKBN0KY0012015012...
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A few observations -
1) So much for ruling Political Party's calling "Snap Elections"!
2) Who is in power in Greece at present won't make much difference.
3) Austerity has had a go in Greece AND FAILED!
4) Keynesian Stimulus has had a go in Japan, AND FAILED!
5) The Fact is the REAL SOURCE OF THE GREEK ECONOMIC PROBLEMS HAS IT S UNDERLYING BASIS IN ITS DEMOGRAPHICS!!!
6) The Greek Fertility rate went below 2.0 around 1982, which meant that Population Growth started to slow earlier than most other countries. The Greek Fertility rate is now one of the lowest, at around 1.30-1.40.   
The last 40 years has seen substantial changes in the Population mix -
a) The 0–14 years section has gone from 25.4% in 1971, to 14.4% in 2011.
b) The 15–64 years section went from 63.7% in 1971, to 66.6% in 2011.       
c) The +65 years section went from 10.9% in 1971, to 19% in 2011. 
http://en.wikipedia.org/wiki/Demographics_of_Greece
7) DEMOGRAPHICS IS THE UNDERLYING SOURCE OF ECONOMIC DEMAND/GROWTH and because Greece, like Japan, had an earlier cessation in its Population Growth, it also went negative on Economic Growth, earlier than many other nations, plus Greece is largely reliant elsewhere, for its supply of Energy & other Natural Resources!
8) Most other nations have similar issues, But there is a timelag, with Japan being the first affected, then others in Europe, China & believe it or not, even Australia will follow! 

Sorry, I digress "a little", But the underlying thing is the Greek Economy is not going to recover, no matter which Political Party is in power and that will have ramifications.

The Real Crisis Facing Japan (Cont)

So we have now seen that Japan faces rising costs from an aging population due to things such as increases in the number of pensions and an increase in the cost of providing health care at exactly at the same time it can least afford it, due to its ever mounting debt burden. However, these are not the only problems an aging and shrinking workforce creates. The overall Japanese economy will find it increasingly difficult to even stay the same size, let alone grow.

The most important part of most economies is the value of the work performed in it. Often, countries are compared on the basis of GDP per capita, which just takes the size of an economy and divides it by its total population. A more accurate measure though it output per worker, since these are the people actually doing the work. So the most important part of any economy is the sum of all the output created by each worker.

However, the Japanese economy can now no longer rely one of those two pillars. Economic growth going forward has to come from increasing productivity. Moreover, for the economy as a whole to grow, the increase in productivity has to be greater than the decrease in size of the working population. Whether or not Japan will be able to do this remains to be seen.

This is part of the reason why Japan has been a leader in automation and why Japan has by far the largest number of robots. It is every easy to have an ATM give you money versus a bank teller, but it is a lot more difficult to create a robot doctor.

By 2050, Japan will only be the world's 17th most populous nation, down from 10th today and 5th in 1950. Moreover, its economy will most likely be smaller than China's, India's and remain behind that of the the United States.

Essentially, Japan has 3 potential options to solve this issue. The first is to do nothing and try to mange the decline as best as possible. The second is to allow mass migration to Japan. This would the easiest and fastest option (and the one I would personally recommend) but I don't think this is a likely option given the mood of the Japanese society. This leaves rapidly increasing the birthrate back to replacement level.


Since I think option 1 is the most likely outcome but option 3 is the most desirable (since I do not foresee mass immigration becoming a politically viable option anytime soon), I will give recommendations on what should be done now to deal with population decline and how to move towards increasing the birthrate.

The first thing that needs to be done in Japan is to increase the age at which retirement benefits start and move away from mandatory retirement.
The second thing to be addressed is defense policy. Japan should keep its pacifist constitution and refrain as much as possible from foreign entanglements.

The third thing that needs to be done is quickly start balancing the budget. Japan's debt burden is far too large already and if it is not fixed very soon it could spell economic disaster. Unfortunately, this will almost certainly mean higher taxes, but this could be offset somewhat if they increase the age at which people get retirement benefits and would allow workers to continue working longer. It will also require an end or at least a large reduction in subsides to agriculture and industry. The longer the Japanese government waits, the more painful these changes are going to be when they are made.

A more egalitarian society would also have another hugely important benefit; it would allow more women to enter the workforce. Increasing female participation in the workforce is critically important if Japan wants to avoid the worst effects of a shrinking workforce.

So there we have it, the demographic issues facing Japan are its biggest problem by the simple fact that they touch on almost all other policy areas, from economic growth and public debt, to things such as defense policy and even gender politics. All of them have or will be impacted by Japan's aging and shrinking population.

http://japanian.com/2009/07/the-real-crisis-facing-japan-part-3-the-solution/
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So, there we have it, SOME OF IT SHOULD RING A FEW BELLS, for most people!

New Apple partner IBM prepares for another round of layoffs

Downplaying reports about the size of its impending layoffs, IBM says it will let go of only “several thousand people,” not the much-larger number reported by Forbes. We’ve updated this story and its headline to reflect IBM’s statements.

Things aren’t going well for IBM. Six months into its partnership with Apple, Big Blue is reportedly preparing for the largest corporate layoff in history.

After nearly three years of quarterly revenue decline, IBM is preparing to ax a staggering 111,800 employees, according to Forbes.

Saying it does not respond to “ridiculous” rumors, IBM says the layoffs will be much smaller than that. How the layoffs will affect the company’s business with Apple remains unclear.

The looming layoffs, code-named “Project Chrome,” would reportedly mean about 26 percent of IBM’s workforce would be let go this week, according Forbes. All 111,800 employees would be gone by the end of next month. Most of the layoffs would happen in the United States, but some international operations would be affected as well.

http://www.cultofmac.com/310012/ibm-prepares-largest-corporate-layoff/#7T0Y60YWu...
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We shall have to wait & see what actually happens there, But it would certainly "shake the tree", if the figures are even half of what is suggested, then it would not make for a good day on markets!

Aussie $ under 0.78 US dollars today.

How low will it go this year?

It's anybodies guess.

I'm guessing 0.68

Economists believe RBA will cut rates in 2015 to bolster economy

ECONOMISTS are increasingly in agreement that Australia needs further interest rates to reduce unemployment and re-balance the economy after a decade-long resources boom fuelled by the industrialization of China.

A majority of economists expect at least one quarter per cent cut in the official cash rate by the Reserve Bank of Australia in 2015, potentially as soon as next week, according to a survey conducted by The Australian.

The unemployment rate is projected to remain stubbornly high – above 6 per cent – through mid-2016.

Thankfully, the Reserve Bank of Australia may have more room to lower official interest rates – currently at a record low 2.5 per cent - as high unemployment and lower oil prices should keep inflation under control.

http://www.theaustralian.com.au/business/economists-believe-rba-will-cut-rates-i...
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Well, again, the RBA & the Politicians are full of -
redible
eliable
bundant
aradoxes

The fact is that lower interest rates is a standard "ploy", which has been usually effective during most of the modern Economic era.

However, THIS TIME IS DIFFERENT & IT HAS ZERO CHANCE OF SUCCESS, AS CAN BE SHOWN IN JAPAN & EUROPE.

In particular, Japan went from 6% in 1990, to effectively zero in 1995, where it has pretty much stayed ever since AND THE JAPANESE ECONOMY IS STILL IN RECESSION, DESPITE NUMEROUS & LARGE STIMULUS PROGRAMS & A MASSIVE & MOUNTING DEBT & EUROPE IS FOLLOWING A SIMILAR TREND! 

So, READ MY LIPS, THIS TIME IS DIFFERENT & LOWERING INTEREST RATES WON'T WORK, but it will continue to erode what little is left for retirees income!!!

Sustainable Growth? Not This Time

Summary

    QE in Europe is expected to result in an increase in demand and boost inflation.
    But we have not seen it in the US case.
    Instead, QE leads to market distortions with an inevitable correction.

Moreover, the next graph shows that the real median household income has been decreasing constantly since 2007. It means that employment growth did not have a positive impact on incomes and demand from the median consumer, which correspondingly did not translate into inflation.


The main beneficiaries of the QE in the US were the wealthiest people, whose share in the nation's wealth have peaked (see the next graph). At the same time, the majority of population experienced a decline in its income and wealth.


"Maybe one lesson is that it's not enough to print money. If you print money, you can create bubbles on the stock market, on real estate prices. But that's not necessarily increasing consumer price inflation and increasing growth."

"QE creates in some markets some distortions, it moves huge volumes of money into the equity markets".

Thus, we can conclude that in line with, or sometimes instead of, stimulating a real economy, the QE leads to overheating of the stock market, example of which, from my point of view, we can now see in the US.

So, what can we expect from the QE in Europe? I guess nothing different than in the US. It will lead to increased capital flows in European stock markets in search for yields, while the real economy and personal incomes will see only moderate positive shock, if any.

Stock markets always react faster than real economy on any monetary changes, since stock valuations are based on expectations. At some point, expectations will not be met and markets will face a correction. The longer we wait, the stronger the correction will be, and it seems to me that in the beginning of 2015 more and more investors are starting to realize it.

http://seekingalpha.com/article/2873756-sustainable-growth-not-this-time?ifp=0
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I have posted this article, mainly to reinforce that gains can be made temporarily, in specific sectors of the Economy (the wealthiest 10%), BUT gains need to be reflected to all sectors, if gains are to be permanent.

In the current circumstances, gains by the top 10% will only be temporary and in the final analysis all sectors will lose, because "some" haven't seen past their own gains, on a temporary basis! 

Dividends: U.S. Economy Contracts In January 2015

Going by the number of publicly-traded companies that acted to cut their dividends in January 2015, the U.S. economy didn't just experience recessionary conditions during the month. Instead, it outright contracted.



Or perhaps a better description of what happened is that the U.S. oil industry's efforts to push its luck as far as it could has run out of good luck to push.

By that, we're referring to the consequences of falling oil prices, which are forcing an increasing number of companies tied to oil extraction activities in the United States to take the dramatic step of slashing their dividends.

Cutting dividends is typically only done when firms lack both the positive earnings and cash flow needed to sustain cash dividend payments at the levels they've previously promised. With that being the case, when a company cuts its dividends, it is confirming that its business prospects have definitively turned for the worse without the potential for a rapid recovery in the near term.

http://seekingalpha.com/article/2878836-dividends-u-s-economy-contracts-in-janua...
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It would seem, we are running out of string & the rubber band is streched far too much!!!

ATO chief sees ‘end of illegal tax havens’

THE days of wealthy Australians hiding income in offshore tax evasion schemes are over, according to ATO chief Chris Jordan.

He said this was due to a culture of leaks and international pressure on tax havens, and announced that $600 million in tax revenue had been raised under the ATO’s part amnesty, Project Do It.

The ATO commissioner also revealed that the ATO was investigating 100 Australians with Swiss bank accounts after a new tranche of leaks from a European bank was handed to Australia by a foreign government.

Project Do It asked people with possibly illegal tax evasion structures to come forward and declare income in offshore tax evasion schemes in tax haven jurisdictions such as the Cayman Islands, ­Bermuda and Switzerland.

They will still be forced to pay taxes and interest but would avoid legal penalties.

http://www.theaustralian.com.au/business/ato-chief-sees-end-of-illegal-tax-haven...
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There is a long way to go, in getting rid of Tax Havens & Loopholes etc, which simply rort the system!

There is also a long way to go, in getting rid of Expenditures, which simply rort the system!

And, the fact is that whilst OZ is considerably better placed now than most other countries, in terms of its Debt to GDP ratio, we are currently on unsustainable settings, where Revenue is going to slow, then decline, whilst Expenditure will increase more rapidly, BOTH LARGELY ON THE BACK OF DEMOGRAPHICS, ENERGY ISSUES & CLIMATE CHANGE! 

So, action on both Revenue & Expenditure is an absolute must, BUT THOSE ACTIONS MUST BE FAIR ON ALL SECTORS & BE SEEN TO BE FAIR OR THE OUTCOMES WILL BE EVEN WORSE!