Mish/ Mike Shedlock – Supersaturation And Store Cannibalization: McDonald’s To Close 700 Stores, 350 Already Took Place First Quarter – 25 April 2015

McDonald’s is closing 700 stores this year, 350 of which took place first quarter. That sounds like a lot but it pales in comparison to the 32,500 stores in the chain.

Still it is a sign of Multiple Problems for McDonald’s

On Wednesday, McDonald’s had reported an 11% decrease in revenue and a 30% drop in profit for the first three months of year, a continuation of its troubles in the last two years as it has struggled to compete with new U.S. competitors, a tough economy in Europe and a food safety scare in Asia.

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Mish/ Mike Shedlock – Iceland Ponders Radical Money Plan Including Elimination Of Fractional Reserve Lending And Deposit Insurance – 1 April 2015

I have long railed against fractional reserve lending, duration mismatches (e.g. banks issuing 2-year CDs and lending money for 15-year mortgages), bank’s ability to lend money into existence, and deposit insurance.

Fractional reserve lending allows banks to lend out a near infinite amount of credit with essentially no backing. Money inevitably creates asset bubbles, but as long as the bubbles are expanding it appears the system is solvent.

Money that depositors believe is available on demand in their checking accounts is not actually present at all. And banks are not required to hold any reserves on savings accounts at all.

Deposit insurance is the epitome of moral hazard. It guarantees money will flow to banks offering the highest yield. Of course, banks offering the highest yields on deposits need to take the highest risks to be able to pay that interest. Depositors do not care because the deposits are insured.

Mish/ Mike Shedlock – SNB Warns Of “Temporary Deflation”, Promises Further “Unconventional Measures” Including Forex Interventions To Achieve “Stability” – 27 March 2015

Unconventional Yields

Swiss Bonds are negative out to 10 years. They briefly went negative out to 15 years in the wake of the sudden removal of the Swiss National Bank peg to the euro back on January 13 as shown in the following chart.

Swiss 15-Year Bond Yield
image: https://lucas2012infos.files.wordpress.com/2015/03/1e38b-swiss2b15-year.png?w=300

Mish/ Mike Shedlock – Cash Dinosaur: France Limits Cash Transactions To €1,000, Puts Restrictions On Gold; Bitcoin End Coming? – 19 March 2015

A few days ago I asked How Long Before Cash is Banned?

My question was in reference to reader CNA (Cards Not Appreciated) who commented …

Hi Mish

I’ve been in Italy for a month. It’s quite amazing how many places ask you to pay cash. Even at hotels, they would like you to pay your €1000+ bills in cash. And people ‘wonder’ why these countries always get into trouble.
CNA

Mish/ Mike Shedlock – Greece Accuses Spain And Portugal Of Conspiracy; 3Rd Greece Bailout Discussion Under Way For €30-50 Billion – 3 March 2015

Now that Germany has agreed to an extension, allegedly with no more money on the table, Spain confirms what we all knew would happen, Third Greek Bailout Under Discussion.

Euro zone countries are discussing a third bailout for Greece worth 30 billion to 50 billion euros, Spain’s economy minister said on Monday, as Athens sought to quell fears it might run out of money before the end of March.

Speaking at an event in Pamplona, in northern Spain, Economy Minister Luis de Guindos said the new rescue plan would set more flexible conditions for Greece, which had no alternative other than European support.

Mish/ Mike Shedlock – Recession is On the Way: Questioning One’s Sanity; Beat the Crowd, Panic Now! – 27 February 2015

In 2006-2007 I called for a recession. We got a big one. I called for another one in 2011, as did the ECRI. That recession never happened.

50% is not a very good recession predicting track record except in comparison to consensus economic opinions that have never once in history predicted a recession. Consensus opinion is batting a perfect 0.00%

Investigating the Record

By the way, the ECRI was late in calling the recession of 2007. They still deny it. And questions regarding the 2001 recession and ECRI have still not been answered.

Mish/ Mike Shedlock – Greek Negotiations and Philosophical Questions – 16 February 2015

Three interesting philosophical questions have arisen this evening in regards to Greek negotiations.

The three questions I ask at the bottom of this post are based on statements made by a global foreign exchange strategy chief at UniCredit bank and two negotiation demands by Greek Prime Minister Alexis Tsipras.

I highlighted in red and italics the source of my questions. Stop at the questions and think about your answers before reading further.

Greece Rift Wider Than Expected

As an 11th hour meeting between Greece and creditors takes place on Monday. But a larger than expected Gap Still Yawns Between the Parties.

Mish/ Mike Shedlock – Steen Jakobsen Warns “Euro is Not a Good Idea and ECB About to Make Biggest Mistake in History” – 14 January 2015

Saxo Bank CIO and chief economist Steen Jakobsen warns the US is not Europe, the Euro is not a good idea, and the ECB is About to Make Biggest Mistake in History.

Via Mish-modified translation from El Economista.

Steen Jakobsen has never been less outspoken regarding historic moment that is about to live the Eurozone. He explains his particular vision of the economy, bluntly. This morning, visiting Madrid, Jakobsen warned that quantitative easing (QE), printing money to buy government bonds, will be the biggest mistake of the European Central Bank, making matters worse.

Mish/ Mike Shedlock – Biggest Bubble: Central Bank Credibility; Cautionary Tale Of Global Gloom From Down Under – 12 January 2015

Australian newspaper “The Age” has an interesting interview with Gerard Minack, former Morgan Stanley strategist.

Minack is now out on his own, publisher of “Downunder Daily“. Minack says “I deliberately decided when I left to keep it balanced, not to start writing like Zero Hedge.”

Nonetheless, Minack is a bear who thinks Australia is in for some tough times, the price of iron ore still has plenty of room to fall, and the most important monetary policy act of the last four years was European Central Bank president Mario Draghi’s “whatever it takes” speech, but the eurozone will break up anyway.

Finally Minack calls “central bank credibility” the biggest bubble. Let’s take a look.

Mish/ Mike Shedlock – Germany Buckles On Greece Already; Advantage Syriza – 8 January 2015

Now that Germany’s ridiculous bluff  that “Greece does not matter any more” failed to produce the desired reaction, German Lawmakers Say Greek Debt Talks Possible After Vote.

Germany is leaving the door open to discussing debt relief with Greece’s next government, lawmakers in Chancellor Angela Merkel’s coalition said, signaling a more flexible stance than her administration has taken publicly.

While writing off Greek debt isn’t on the table, talks on easing the repayment terms on aid that Greece received from European governments are possible after the country’s parliamentary elections on Jan. 25, the lawmakers from Germany’s two biggest governing parties said. The condition is that Greece sticks to its austerity commitments, they said.

Read the full story at: www./globaleconomicanalysis.blogspot.com / link to original article