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Generational Dynamics Web Log for 26-Jun-2014
26-Jun-14 World View -- Ukraine to sign trade deal with European Union on Friday

Web Log - June, 2014

26-Jun-14 World View -- Ukraine to sign trade deal with European Union on Friday

Stocks rise after disastrous GDP report

This morning's key headlines from GenerationalDynamics.com

At least 21 killed in Nigerian shopping mall explosion
Ukraine to sign trade deal with European Union on Friday
Stocks rise after disastrous GDP report

At least 21 killed in Nigerian shopping mall explosion

Aftermath of suicide car bomb in Abuja on Wednesday

Aftermath of suicide car bomb in Abuja on Wednesday

It's assumed that Boko Haram is responsible for the suicide car bombing on Wednesday that caused a massive explosion in a shopping mall in Abuja, the capital city of Nigeria, killing at least 21 people, and scattering body parts around the plaza. It seems that Nigeria's government and army can do nothing to stop the repeated attacks, one or two every week, from Boko Haram, including abductions, gunfights and suicide bombings. It was just just yesterday that we reported that Boko Haram had abducted 90 more women, in addition to the 200+ schoolgirls that they'd already abducted. Daily Mail (London) and Nigerian Bulletin

Ukraine to sign trade deal with European Union on Friday

The event that triggered the violent crisis besetting Ukraine for the last seven months was the last-minute flip-flop by then-president Viktor Yanukovych, who had promised to sign a trade deal with the European Union, to ditch the EU deal and go with a trade deal with Russia.

Now the new president of Ukraine, Petro Poroshenko, is going to Brussels on Friday to to sign that same trade deal with the EU, apparently with the reluctant blessings of the Russians. According to Russia's Economic Development Minister, Alexei Ulyukayev:

"A three-party meeting of the EU, Ukraine and Russia is expected to take place at the ministerial level in July. EU Trade Commissioner Karel de Gucht, Ukrainian Economy Minister Pavel Sheremet and I will meet to discuss risks that will emerge over the implementation of this agreement and possible measures to offset these risks."

Ulyukayev says that from Russia's point of view, there are two groups of problems:

Since imports into Ukraine from the EU are almost tariff-free, and imports into Russia from Ukraine are almost tariff-free, it's feared that imports from the EU will go through Ukraine into Russia without paying any tariffs. However, imports into Russia from the EU are currently NOT tariff-free. Russia is concerned about uncontrolled imports due to the introduction of European technical regulations and the problem of imports from third countries," according to Ulyukayev.

There are a large number of existing agreements between Ukraine and Russia on such things as technical regulation, veterinary control and pharmacology, -- things "dealing with citizens’ safety and health." These agreements will have to be renegotiated.

The Ukraine-EU trade deal is 1,200-page document crammed with rules on everything from turkeys to tulips, cheese to machinery. Itar-Tass (Moscow) and Canadian Broadcasting

Stocks rise after disastrous GDP report

The stock market rose on Wednesday, after the Commerce Department revised its estimate of GDP growth from the first quarter, originally reported to be an anemic +1.0%, to a disastrous fall of 2.9%. The nearly 3% contraction in the economy during the first quarter is being blamed variously on the weather and Obamacare. According to one estimate, indirect taxes from Obamacare are the highest tax increase in decades.

Mainstream economists were shocked by this report. Every quarter, they predict that the economy's growth will start to surge in the next quarter, just as it did after recessions in the 1970s, 80s and 90s. But as I've pointed out many, many times, mainstream economics didn't predict and can't explain the tech bubble of the 1990s, didn't predict and can't explain the huge credit and real estable bubble of the mid-2000s decade, and the real estate collapse and credit crisis after 2007. Hell, they didn't even know that there'd been a real estate bubble until around 2009, two years after it had started to burst.

Mainstream economists didn't predict and can't explain any of those events. They don't have a clue what the economy is going to do this year, and even less of a clue about next year.

What they don't understand is that a return to the 1970s-90s is 100% impossible. That was a different generational era. From the point of view of Generational Dynamics, the mood and behavior of people today matches the 1930s, not the 1980s, which means that the velocity of money is going to continue to plummet, and that the economy is in a deflationary spiral.

However, stock market share prices rose on Wednesday. The reason that investors were happy about the disastrous GDP data was that it means that the Fed will continue its program of "printing" tens of billions of dollars in new money, and pumping into the financial system, allowing it to flow into the stock market.

For investors, bad news is still good news. Investing.com

(Comments: For reader comments, questions and discussion, see the 26-Jun-14 World View -- Ukraine to sign trade deal with European Union on Friday thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-Jun-2014) Permanent Link
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Generational Dynamics Web Log for 26-Jun-2014 26-Jun-14 World View -- Ukraine to sign trade deal with European Union on Friday

At least 21 killed in Nigerian shopping mall explosion

Ukraine to sign trade deal with European Union on Friday

Stocks rise after disastrous GDP report

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Generational Dynamics Web Log for 26-Jun-2014
26-Jun-14 World View -- Ukraine to sign trade deal with European Union on Friday