We can only hope, but I'm not holding my breath.

the monkey wrench in the toolbox, the worm in the apple, the savior of the People...

as they were last year. How horrible it feels to be grasping at straws....and knowing that odds are good that your own party will betray your interests.

Greece Is About To Dance A Wild Sirtaki

http://www.theautomaticearth.com/greece-is-about-to-dance-a-wild-sirtaki/

On January 22, the ECB has another meeting, and investors – as well as EU governments – are still thinking Draghi will announce full-blown QE. With the Germans resisting the way they consistently have for years now, I wouldn’t count on it. It’ll be extremely hard to push through the German court system. But Merkel’s government still ‘leaked’ to Der Spiegel yesterday that a Grexit would have limited consequences. That’s just bluff, they’re scared sh*tless. They have no way of overseeing anything at all, no more than you or me.

But three days after the ECB meeting, on January 25, there are general elections in Greece, because PM Samaras wasn’t paying attention last month. And everyone’s very nervous about a Syriza victory, since that party is supposed to be extremely marxist, communist, Leninist, you name it. They will be called a lot worse names over the next three weeks, and if g-d forbid they win, much worse still. Syriza is calling the EU-ECB-IMF troika’s bluff. And they don’t like that one bit. And lest you forget, they’ve forcibly installed technocrat governments before. We can’t have the people speak.



But that’s by no means a generally accepted opinion.



Sure, let’s bankrupt the governments, their deficits ain’t high enough yet. The overall idea is clear though: there’s no way of knowing how high the tensions will rise, which countries will also want out, to what extent bond markets will target (more) eurozone nations. That German confidence is hollow. I fully agree with Rogoff on this, the euro is a disaster that needs to be halted as soon as possible, before the damage it’s done gets out of control. Yes, a break-up is hard, but continuing on the existing broken path is a lot worse.

Syriza leader Alexis Tsipras has an interesting take on the situation:



That sounds almost a bit too Keynesian, and Merkel certainly won’t like any of it, if only because she could never get debt forgiveness passed at home, let alone buying Greek bonds with German money in the year of the Lord 2015.

In yet another curious twist, Deputy PM Venizelos talks today in Greek paper Kathimerini about a September 2011 meeting (he was Finance Minister at the time) with Schaeuble in a Polish hotel basement bar, where the latter proposed a friendly Grexit, with financial support and all. Venizelos claims he convinced Schaeuble it would be too risky. That seems weird. I have the idea Venizelos doesn’t tell the whole truth here (I know, get in line). I’m sure the meeting took place, you don’t make that up. But Schaeuble could not have made the proposal without Merkel’s full advance consent, and that means they talked it over, a lot. They would have covered a lot of angles on the risks in those talks. So Venizelos couldn’t have told Schaeuble all sorts of things the entire German government overlooked, in a meeting in a dark hotel bar. Moreover, the proposal would have come at a time when everyone was saying, as they officially still are, that no country would be able or permitted to leave the eurozone.

I’m also curious as to why Venizelos tells the story the moment he does, 3 weeks before the election. To picture himself as the savior of the nation? To put more pressure on Germany? Venizelos has plenty issues on his plate. He heads PASOK, Papandreou’s former party, but it’s only third in the polls, well behind Syriza and PM Samaras’ New Democracy. And then Papandreou announced this weekend that he will cause more trouble:



It crystal clear: we’ve got a very entertaining three weeks of news coming up from Brussels and Athens. It won’t be pretty, but it’ll be amusing. To top it off, the euro just fell to its lowest level in almost 9 years.

Oh, and just in case you thought only Greece has poor young people, how about this?



Not terribly lovely either, is it? I think we can call this the Anglo model. The UK does it too, talk about how great the recovery is going, and completely ‘forgetting’ to mention that its young people, and women, and children, are being squeezed dry just to be able to paint that recovery picture. If a number like that one above falls by half in just 7 years, something’s really going off a cliff.

I’ll leave you with Anthony Quinn dancing the sirtaki in what must have been better days:

http://www.forbes.com/sites/timworstall/2015/01/05/greek-euro-exit-would-be-a-benefit-so-why-is-samaras-warning-of-the-risk/

One of the little puzzles about politics as it is actually done is that all too often we’ve got politicians standing up and warning us against the risk of something that would actually be very good for us and the economy. And so it is with the Greek Prime Minister, Samaras, warning voters that there’s a risk that a Syriza vitory could lead to Greece’s exit from the euro. I am not, in any manner, a supporter of Syriza or of other such leftwing parties, but a Greek exit from the euro would be beneficial to Greece, Greeks and the Greek economy. So why warn against the “risk” of it happening?

Here’s the report:



It’s worth taking a little step back here and considering the economic situation without the interference of European Union politics. Greece is, as a nation, effectively bankrupt. The public debt is of such size that it simply cannot ever be repaid. However, nations do not go bankrupt. So, some other solution must be found. And over the centuries we’ve worked out what is the appropriate treatment in such cases. Of course, some of it is that the debt needs to be renegotiated. Just as with a commercial organisation that goes bust, the people that lent it the money only get some of it back, so the same is true of a country. Oh dear, sorry, you’ve lost some of your money. Tough and better luck next time...But that’s not all that happens. Even when we had the gold standard, more so under Bretton Woods, and at the heart of every IMF stabilisation programme since, has been the idea that a country must also devalue its currency in order to regain some sort of competitiveness. The alternative to such a devaluation is that the country must undergo a grinding internal devaluation of wages and thus prices. And as Keynes rightly pointed out this isn’t a happy process. We all have very firm opinions about what happens when our nominal wages decline. Yet that’s what has to happen in such an internal devaluation. Far better, far easier, causing much less pain, is to devalue the currency in a once off transaction.

Thus countries in the 1930s left the gold standard and after some 12 to 18 months found that they were recovering nicely. That’s certainly what happened to my native UK in that time period. They were even able to bring public spending and the deficit under control at the same time...The same would be true of the Greek economy if a devaluation were possible. But, of course, being in the euro means that one is not. And that, in turn, is why Greece leaving the euro would be such a good idea. Yes, obviously, it would be chaotic and the first few months would not be pretty. But the standard economic prescription for what ails the country is devaluation. Given that membership of the euro is incompatible with this then the country should not be in the euro. QED.

Which is what makes Samaras’ warning so odd. It’s not that there’s a risk of a Syriza victory leading to Grexit, it’s that a victory for anyone else leads to the risk that there won’t be Grexit...

http://www.aljazeera.com/indepth/opinion/2015/01/if-greece-turns-left-will-europe--2015116949750353.html

A SYRIZA victory would mean a clear message by the Greek people against austerity. Greece is heading towards snap elections on January 25 after the conservative coalition government, currently in office, failed to reach a supermajority of 180 MPs in order to elect the new president of the republic as dictated by the Greek constitution...Stavros Demas, a former European Commissioner and candidate of choice of the two ruling parties, was never really proposed with the purpose to achieve and express the maximum consensus among the Greek population. Demas is coming from the heart of the ruling conservative New Democracy party and symbolises the party's loyalty to the current establishment in the EU. The main opposition party, SYRIZA openly invested in the constitutional opportunity to overturn the government months ago, claiming that its endurance in office for two more years would be abnormal as it would contradict the popular sentiment tracked in every opinion poll during the past year or so. By all odds, SYRIZA is leading the polls by 3 percent to 10 percent and is expected to form a government either based on a robust majority of the left in parliament, or, in coalition with minor parties who are willing to follow its agenda, renegotiate a bailout agreement that will not be catastrophic for Greek society and the Greek economy.

Austerity has failed

Despite the fact that both the German and the Greek conservative governments present the current bailout programme as a "success story", most analysts around the globe agree that it has actually failed.

• Six years of continuing recession have resulted in a loss of 25 percent of GDP and a rise of unemployment to 27 percent.
  
  
• Greek debt is well over 170 percent of GDP now and according to Troika estimations it will be no less than 120 percent by 2020.
  
  These facts translate to two things.
  
  
• Firstly, there can be no development under austerity policies for the majority of the population, even if the Eurozone fixes its competitiveness problem and exits deflation and the Greek economy starts developing at a growth rate of over 4 percent - which is highly unlikely.
  
  
• Secondly, there can be no functioning democracy so long as Greece is not given choices other than poverty, degrowth and exclusion. Greece is in the state of protectorate at the moment, bound in a bailout agreement that strips its ability to produce and reject different solutions.

But it's not just Greece

Spain follows the same path both in regards to the social crisis and the political management of that crisis. Poverty and unemployment figures look much like the Greek ones and the Spanish conservative government resorts to authoritarian measures in order to keep the Spanish society tight. For example, the public security law voted a few days ago is a clear attempt of the government to muzzle protests over its handling of the financial crisis. Deflation hits Europe and the prospects of its biggest economies, like France's, Italy's and Germany's, are not looking good to pull the Eurozone back to the track of growth. As a result, political forces that question austerity are gaining momentum whether they are nationalist Euroskeptic and even fascist, or progressive, democratic and pro-European like the Spanish ally party of SYRIZA, Podemos.

What is striking about SYRIZA is that its critique and analysis since 2009 have been proven to be correct despite the continuing fear campaign against it both inside and out of the country.

Recently Prime Minister Antonis Samaras accused the party of the radical left that it will lead Greece to default and bankruptcy if it tries to negotiate lighter terms for the repayment of the Greek debt.

Jean Claude Juncker's Commission has been issuing exhortations to the Greek electorate not to vote for SYRIZA and German finance minister is openly saying that there is no alternative for Greece, no matter which government comes in office.

Economic analysts agree with SYRIZA

But economic analysts who have defended the reforms are starting to agree with SYRIZA on several issues, including the need to stop austerity and move faster to a process of debt forgiveness. FT's Wolfgang Munchau writes that "the radical left is right about Europe's debt". Bloomberg argues that the end of austerity may boost the global economy and even Morgan Stanley asks bond holders not to be afraid of the coming elections. Despite the fear-mongering campaign, economic analysts reject now a possible "grexit" due to markets' belief that some kind of deal is preferable both for Greece and the EU.

Will Greek politics affect economy bailout?

In this environment, a SYRIZA victory would mean two very important things; the return of the power to decide to a democratically elected government and the restoration of inclusiveness and national sovereignty and the opening of a new chapter in European politics, where the parties and the organisations who challenge austerity will have the momentum. The Greek people have patiently given the opportunity to the neoliberal technocrats of the IMF and the EU along with their local counterparts in the conservative coalition government to experiment and find a way out of the mess for more than five years only to receive back pain and failure. Now they're being given the opportunity to exercise their democratic right to choose which way the country will turn. SYRIZA is asking for debt forgiveness and a New Deal for Europe, both rather moderate demands coming from a radical left party.

If SYRIZA actually wins the elections, the Greek people will be the first to send a clear message against austerity, one that can spark change, much needed on the continent right now. And if SYRIZA succeeds then Europe may start a new page in its economic and political history.

Matthaios Tsimitakis is a journalist based in Athens.

http://www.businessinsider.com/europe-may-not-be-ready-for-another-greek-crisis-2015-1

FRANKFURT, Germany (AP) — Talk of Greece crashing out of the euro is back.

And the question of whether Europe can handle another crisis in Greece is heightening financial uncertainty for the currency union just as it is struggling to grow and create jobs.

Some analysts and politicians say Greece 2.0 wouldn't be as rough on the eurozone as the original Greek crisis and default in 2010-2012.

They claim the currency bloc has new safeguards. Most investors seem to agree for now.

Others argue that's dangerous complacency.



Read more: http://www.businessinsider.com/europe-may-not-be-ready-for-another-greek-crisis-2015-1#ixzz3O2VXuZCm

http://www.businessinsider.com/10-most-important-things-in-the-world-jan-6-2015-1

1. Divers have recovered five major parts of wreckage from AirAsia Flight 8501, but have yet to find the crucial "black box."

2. French president Francois Hollande said in an interview Monday that Western nations should ease existing sanctions on Russia.

3. Thousands of anti-immigrant protesters from the Pegida movement, a German acronym for Patriotic Europeans Against Islamization of the West, demonstrated in Dresden, Germany, on Monday.

4. SpaceX will launch one of its Falcon 9 rockets at 6:20 a.m. ET (11:20 p.m. GMT) on an unmanned cargo trip to the International Space Station and then attempt to land the first stage of the rocket on a floating barge.

5. A cargo ship carrying luxury cars, valued at £30 million ($45 million), was deliberately grounded onto a sandbank off the English coast to prevent it from capsizing.



Read more: http://www.businessinsider.com/10-most-important-things-in-the-world-jan-6-2015-1#ixzz3O2a66j8s

http://www.businessinsider.com/the-euro-crisis-is-entering-a-new-highly-dangerous-phase-2015-1#ixzz3NrWvuZK7

EVER since the euro crisis erupted in late 2009 Greece has been at or near its heart. It was the first country to receive a bail-out, in May 2010. It was the subject of repeated debate over a possible departure from the single currency (the so-called Grexit) in 2011 and again in 2012. It is the only country in the euro zone whose official debt has been restructured. On December 29th the Greek parliament failed to elect a president, forcing an early snap election to be called for January 25th. The euro crisis is entering a new, highly dangerous phase, and once again Greece finds itself at the centre.

Investors promptly swooned, with the Athens stockmarket falling by almost 5% in a single day, bank shares down by even more and Greek ten-year bond yields rising to a new 2014 high of 9.5% (over seven points above those for Italy). The reason for this collective outbreak of nerves is that the polls point to an election win for Syriza, a far-left populist party led by Alexis Tsipras.

Although Mr Tsipras says he wants to keep Greece in the euro, he also wants to dump most of the conditions attached to its bail-outs: he would end austerity, reverse cuts in the minimum wage and in public spending, scrap asset sales and seek to repudiate much of the country's debt. Such a programme seems, to put it mildly, to sit uncomfortably with Greece's continuing membership of the single currency. The early election is likely therefore to create a political crisis in Greece. What happens beyond that is less clear. Investors seem to be betting that the people of Italy, Spain and France will peek at the chaos in Athens, shudder--and stick to the austerity that Germany's Angela Merkel has prescribed for them.

But that seems too sanguine to this newspaper. It is hard to believe that a Greek crisis will not unleash fresh ructions elsewhere in the euro zone--not least because some of Mrs Merkel's medicine is patently doing more harm than good...

MUCH MORE HAND=WRINGING AND FINGER-WAGGING AT LINK

http://www.businessinsider.com/oil-keeps-falling-2015-1

Oil is still falling this morning, after WTI crude went below $50 a barrel for the first time since May 2009 yesterday.

At 10.30 am GMT (5.30 am ET), Brent was trading at $51.58 a barrel, down 3.85%. That's another five and a half-year low.

WTI crude was being sold at $48.63 per barrel, down another 2.8% from its previous price. Crude oil's per barrel price is down by practically $10 in the last two weeks, following December's falls. Here's how that looks in context:



Read more: http://www.businessinsider.com/oil-keeps-falling-2015-1#ixzz3O2aQspjS

http://www.businessinsider.com/market-update-6-jan-2015-2015-1

Here's the scorecard as of 10.22 a.m. GMT:

France's CAC 40: -0.28%

Germany's DAX: -0.09%

UK's FTSE 100: -1.08%

Spain's IBEX: -0.74%

Italy's FTSE MIB: +0.66% (the only rising index)

The Nikkei saw its biggest drop in 10 months, down 3.02%, followed by Hong Kong's Hang Seng index, which ended 1.03% lower. The Shanghai Composite index closed up just 0.03%, effectively flat.

Stock markets in the Arab world are getting hammered too, following the falling oil price:

Dubai Financial Market: -3.24%

Saudi Tadawul: -3.20%

Abu Dhabi Stock Exchange: -2.66%

US futures are falling a little. The S&P is currently 3.75 points lower, and the Dow is down 28 points. That's after a four day sell-off running to yesterday, breaking the longest streak in 87 years without one.

US PMI readings are coming at 2.45 p.m. GMT, followed by official factory orders numbers 15 minutes later. Analysts are expected a 0.5% drop in orders for November, from October's level.



Read more: http://www.businessinsider.com/market-update-6-jan-2015-2015-1#ixzz3O2b1dFUk

330 points and no PPT! No fairies! No nothing!

To be fair, the PPT did put in a couple of attempts to arrest the freefall...and they succeeded in keeping it from being 400 points. but that was yesterday. Who wants to take my bet on today's fall?

I sure hope that's the end of bubbles, now that the biggest one of all (oil) has collapsed. Some commentator said the collapse of everything is due to the price of oil being too high for too long....there were a lot of supporting members to the continuing crisis, but it is true that the price of oil has been strangling the US for some time, which is why the stimulus wasn't very stimulating, QE didn't, and unemployment continued to grow around the world.

Oil was just the first bubble. Just about everything is a bubble nowadays:
Stocks, bonds, another housing bubble, college, transportation, insurance, pensions, healthcare, even food.
There'll be bubbles popping for years around the world.

http://www.businessinsider.com/afp-french-german-borrowing-rates-at-new-all-time-lows-2015-1

Paris (AFP) - French and German borrowing rates reached new all-time lows on Tuesday amid fears over the prospect of Greece leaving the eurozone.

As of 0830 GMT, France's 10-year debt hit 0.772 percent on the secondary market, while the German 10-year Bund fell to 0.484 percent.



Read more: http://www.businessinsider.com/afp-french-german-borrowing-rates-at-new-all-time-lows-2015-1#ixzz3O2bY3vl7

http://www.businessinsider.com/r-euro-zone-economy-ended-2014-in-poor-shape-pmi-2015-1

LONDON (Reuters) - The euro zone economy ended 2014 with its worst quarter for over a year as further price cutting failed to significantly drive up business activity, adding pressure on the European Central Bank to act, surveys showed.

Also of concern to policymakers, the surveys highlighted an ongoing downturn in France and Italy and only a stuttering performance in Germany, Europe's largest economy.

"The weakness of the PMI in December will add to calls for more aggressive central bank stimulus, including full-scale quantitative easing, to be undertaken as soon as possible," said Chris Williamson, chief economist at survey compiler Markit.

Markit's final December Composite Purchasing Managers' Index (PMI), based on surveys of thousands of companies across the region and seen as a good indicator of growth, missed an earlier flash reading of 51.7, coming in at 51.4.



Read more: http://www.businessinsider.com/r-euro-zone-economy-ended-2014-in-poor-shape-pmi-2015-1#ixzz3O2c2qAg1

and Angela had better retire before she's decapitated, figuratively speaking....

bringing our total for the winter so far to something like maybe 4 inches.


from Weather Underground:

As for Ann Arbor? Ain't nobody here but us chickens....

We have snow in Ohio too, good day to stay in and keep warm.

http://hosted.ap.org/dynamic/stories/F/FINANCIAL_MARKETS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2015-01-06-04-14-30

KEEPING SCORE: In early trading, Germany's DAX was down 0.6 percent at 9,415.26 and Paris's CAC-40 lost 0.5 percent to 4,091.64. London's FTSE 100 was off 0.7 percent at 6,370.10. U.S. crude oil futures slipped below $50 a barrel. Wall Street looked set for more declines. Dow futures were down 0.1 percent at 17,430 and S&P 500 futures shed 0.1 percent to 2,013.10.

OIL SLUMP: The prolonged slide in oil prices should help economic growth by reducing energy costs but the depth of the downturn has fueled concern it might foretell a global slowdown. Also, as the price of oil falls, energy companies might cut jobs, put off investment or go out of business. On Monday, Transocean, a company that provides offshore drilling services to oil companies, was one of Wall Street's biggest decliners, losing 7.1 percent.

EURO JITTERS: The possibility that Greece's anti-austerity Syriza party might win national elections this month has fed doubts about whether the country will stick to terms of its bailout and remain in the euro bloc. Germany has warned against reneging on bailout terms. The euro already was under pressure from concern about the region's growth outlook and expectations the European Central Bank will expand monetary stimulus.

ANALYST'S TAKE: "The unwind in equities has continued with markets mostly risk-off on flaring oil and Greece concerns. As oil prices venture to levels not seen in over five years, the energy space is predictably the hardest hit," said IG market strategist Stan Shamu in a report. "Being a net importer of oil, the Eurozone should have been a beneficiary of this drop in oil prices but things are a little complicated for the region at the moment."

ASIA'S DAY: Tokyo's Nikkei 225 tumbled 3 percent to 16,883.19 and Seoul's Kospi shed 1.7 percent to 1,882.45. Hong Kong's Hang Seng declined 1 percent to 23,485.41. The Shanghai Composite Index was barely changed at 3,351.45. India's Sensex was off 2.7 percent at 27,102.70. Benchmarks in Taipei, Singapore, Sydney and New Zealand also declined.

http://hosted.ap.org/dynamic/stories/E/EU_EUROPE_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2015-01-06-05-15-05

LONDON (AP) -- Weakness in the eurozone's major economies, such as Germany and France, risks choking off the growth emerging in countries that were at the forefront of the region's debt crisis, a closely monitored survey indicated Tuesday.

In its monthly survey of business activity, financial information company Markit said the eurozone ended 2014 on a tepid note despite "signs of life" in countries like Ireland and Spain, which were hit hard by the financial crisis.

It said its so-called purchasing managers' index rose to 51.4 points in December from 51.1 the previous month. However, that was down from a preliminary estimate for December of 51.7, with figures above 50 indicating expansion. Overall, that suggests that the rate of economic expansion during the fourth quarter was the weakest since the third quarter of 2013.

Markit estimates that the eurozone, which now numbers 19 countries following Lithuania's adoption of the euro at the start of January, grew by a quarterly rate of 0.1 percent in the last three months of the year, continuing the trend of minimal growth since the recession ended in the middle of 2013.

http://www.salon.com/2015/01/02/coca_colas_anti_american_outsourcing_scheme_how_big_soda_gets_the_public_to_shoulder_its_costs/

FASCINATING STORY OF THE DRINK WE LOVE TO HATE....ENTERTAINING AND EDUCATIONAL

https://secure.marketwatch.com/story/two-things-obamacare-will-do-to-your-2014-taxes-2015-01-06?siteid=YAHOOB

Alert: W-2s and 1099s for 2014 will soon be arriving in the mail. So it’s not too early to start thinking about putting together your Form 1040 for last year. For 2014, there are only two important federal income tax changes for individual taxpayers (beyond the usual inflation-indexing of tax rate brackets and various other tax parameters). Both changes have to do with Obamacare. Here’s what you need to know at tax preparation time.

Penalty for failure to carry ‘minimum essential coverage’

The Patient Protection and Affordable Care Act - also referred to as Obamacare - established a new federal income tax penalty for failure to carry so-called “minimum essential coverage.” Last year was the introductory year for the penalty, which can potentially be owed for any month when qualifying health coverage was not in force. (In IRS-speak, the penalty is called a “shared responsibility payment.”)

You don’t have to worry about the penalty if you (and all members of your family, if applicable) had qualifying coverage for all of last year. In this case, simply check the box on line 61 of Form 1040, and you’re done.

If you did not have qualifying coverage for the entire year, the first task is to determine if you are exempt from the penalty. For that, see the instructions to new IRS Form 8965 Health Coverage Exemptions (and instructions for figuring your shared responsibility payment). If you were exempt for last year, file Form 8965 with your 2014 Form 1040 to prove it. For additional information on exemptions, see IRS Publication 5187, Health Care Law: What’s New for Individuals and Families. Both Form 8965 and Publication 5187 can be accessed at irs.gov .

If you were not exempt, the next step is to calculate the penalty amount that you owe using the worksheet in the instructions to Form 8965. Enter the penalty amount on line 61 of your return. For 2014, the penalty can range from $95 or less to a good deal more for higher-income folks. For plain-English details, see Owe the IRS money? Here’s some good news. Also be aware that the penalty for 2015 and beyond can be much higher than the penalty for last year.

Premium assistance tax credit

The other Obamacare change for 2014 was the debut of the so-called premium assistance tax credit (PTC in IRS-speak). It is available to eligible individuals and families who obtain health coverage in a qualifying plan by enrolling through a state-run insurance exchange or through the federal exchange ( healthcare.gov ).

In general, you are eligible for the PTC if your household income was between 100% and 400% of the federal poverty line and you did not have access to affordable employer-sponsored coverage last year. The allowable credit amount can vary widely depending on your specific circumstances. For additional information on the PTC, see IRS Publication 974, Premium Tax Credit.

The PTC can be advanced directly to the insurance company to lower your monthly premiums or it can be claimed when you file your return. You may not know the exact amount of your allowable PTC for last year until you actually file your 2014 Form 1040. Calculate the PTC using new IRS Form 8962, Premium Tax Credit. Taken together, Form 8962 and its instructions add up to a daunting 17 pages. Enjoy!

If advance PTC payments were made on your behalf last year, the amount of those payments should be reported by the exchange to you on new Form 1095-A, Health Insurance Marketplace Statement. You should receive Form 1095-A by no later than early February. Then calculate the difference between your advance PTC payments (if any) and the PTC amount you are actually entitled to claim on Form 8962. Enter any excess PTC amount on line 46 of Form 1040 and pay it when you file.

Finally, you should know that the PTC is a so-called “refundable credit.” That means you can collect the full allowable credit amount even when it exceeds your federal income tax liability for last year. Specifically, the PTC amount is first used to reduce your federal income tax bill. After your bill has been reduced to zero, any remaining PTC can be either refunded to you in cash or used to make estimated tax payments for the 2015 tax year.

The bottom line

The good news is there were very few changes to the 2014 Form 1040, compared with the 2013 version. The bad news is the two Obamacare-related changes are very complicated. You may need to hire a tax pro to sort things out. The other bad news is that the Supreme Court may decide to disallow the PTC for folks who got their coverage through the federal exchange. (See The year’s biggest tax stories.) However, if that happens then some sort of accommodation will probably be reached for folks who relied on collecting the credit for last year. Stay tuned. I’ll keep you posted.

https://secure.marketwatch.com/story/beware-of-2015-health-insurance-individual-mandate-penalty-2014-12-09


The Obamacare law imposes a penalty on individuals who fail to have so-called minimum essential health insurance coverage for any month. This requirement is commonly called the individual mandate, and the penalty is the cost of noncompliance with the mandate. The bad news is the penalty can be considerably more expensive in 2015. If you are like me and had your health insurance cancelled (again), you must obtain coverage quickly to avoid getting socked with the penalty in 2015. Here’s what you need to know.

Penalty basics

Unless you are exempt, you will owe the penalty if you do not have minimum essential coverage for yourself and your dependents. Minimum essential coverage includes certain government-sponsored programs (such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and TRICARE), eligible employer-sponsored plans, plans obtained in the individual market, certain grandfathered group plans, and certain other coverage specified by the federal government. However, if you fit into one of the following categories next year, you will be exempt from the penalty in 2015.

Your 2015 household income is below the federal income tax return filing threshold (generally $10,300 for singles, $20,600 for married joint-filing couples, and $13,250 for heads of households).

You are considered to lack access to affordable minimum essential coverage. For example, coverage under an employer-sponsored plan is considered unaffordable if your required monthly contribution exceeds 8% of household income.

You suffered a hardship in obtaining coverage. To qualify for this exception, you should obtain a hardship exception certificate issued by an Insurance Exchange.

You have only a short coverage gap.

You qualify for an exception on religious grounds or have coverage through a health-care sharing ministry.

You are not a U.S. citizen or national or you are in the U.S. illegally.

You are incarcerated.

You are a member of an Indian tribe.

For more details on available exemptions, see IRS Publication 5172 (Facts about Health Coverage Exemptions) at www.irs.gov .

Penalty specifics

If you owe the penalty, the tentative amount equals the greater of the following two prongs:

1. The applicable percentage of your household income above the federal income tax return filing threshold or

2. The applicable dollar amount times the number of uninsured individuals in your household, limited to 300% of the applicable dollar amount.

The final penalty amount cannot exceed the national average cost of “bronze coverage” (a new term of art) for your household. For 2014, the national average cost for bronze coverage was $204 per person per month or $1,020 per month for a family of five or more. The 2015 national average for bronze coverage won’t be revealed until late next year.

Meanwhile, the important thing to know is that a higher income person or household could owe more than 300% of the applicable dollar amount but not more than the cost of bronze coverage. Confusing? You bet. But please hang in there, because things will soon become clearer.

Percentage of income prong: The applicable percentage of income is 2% for 2015 (it was only 1% for 2014). In 2016 and beyond, it will increase to 2.5%.

Dollar amount prong: The applicable dollar amount for each uninsured household member is $325 for 2015. For 2016, it will rise to $695. For 2017 and beyond, it will be $695 adjusted for inflation. (For 2014, the applicable dollar amount was only $95.) For an under-age-18 household member, the applicable dollar amounts are cut by 50%. As stated earlier, this prong of the penalty cannot exceed 300% of the applicable dollar amount (determined without regard to the 50% cutback for under-age-18 individuals) for the year in question.

Final penalty amount: As stated earlier, the tentative penalty amount is the greater of the percentage of income prong or the dollar amount prong. But the final penalty amount is limited to the national average cost of bronze coverage. If you have minimum essential coverage for only part of the year, the penalty is calculated on a monthly basis using pro-rated annual figures.

Here are some examples

As you can see, the penalty rules are pretty complicated. The following examples illustrate how to calculate the penalty for 2015 in the two simplest situations.

Example 1: One-person household with no coverage for entire year

Say you are unmarried and live alone. During all of 2015, you have no minimum essential coverage. Your income for the year is $100,000. Your tax return filing threshold for the year is $10,300. Assume the monthly national average premium for bronze coverage for one person is $250 for 2015, which amounts to $3,000 for the entire year (12 x $250).

In your case, the percentage of income prong is $1,794 for 2015 [($100,000-$10,300) x 2%].

The dollar amount prong is $325.

The tentative penalty amount is $1,794 (greater of $1,794 or $325).

As stated, the annual national average cost of bronze coverage is assumed to be $3,000 for one person who is uncovered for all of 2015.

Therefore, your final penalty amount for failing to comply with the individual mandate is $1,794 (lesser of $1,794 or $3,000).

If your circumstances are the same in 2016, the final penalty amount for that year will probably be about $2,200. Ouch!

Example 2: Family of five with no coverage for entire year

Say you are a married joint filer with three kids younger than 19. During all of 2015, no member of your family has minimum essential coverage. Your household income for the year is $100,000. Your tax return filing threshold for the year is $20,600. Assume the 2015 national average premium for bronze coverage for a family of five is $1,100 per month, or $13,200 if you have no coverage for the entire year.

In your case, the percentage of income penalty prong is $1,588 [($100,000-$20,600) x 2%].

The dollar amount penalty prong is $975, which is the lesser of: (1) [($325 x 2 for the adults) + ($325/2 x 3 for the kids) = $1,137.50] or (2) ($325 x 300% = $975).

The tentative penalty amount is $1,588 (greater of $1,588 or $975).

The final penalty amount is $1,588 (lesser of $1,588 or the $13,200 cost of bronze coverage).

If your circumstances are the same in 2016, the penalty amount for that year will probably be about $2,000.

Penalty enforcement is lacking

You are supposed to pay any penalty you owe with your Form 1040 for the year. So the penalty for 2015 would be reported on your 2015 return which you will file sometime in 2016. However, the only enforcement mechanism is that the government can subtract any unpaid penalty from your federal income tax refunds. So if you’re not owed a refund for 2015 or a later year, there will never be any consequences for not paying the penalty. (You are not subject to criminal prosecution, and the IRS cannot put a lien or levy on your income or assets.)

The last word

After all the well-publicized problems in the Obamacare rollout, some observers (including me) speculated that the individual mandate penalty might be postponed for at least 2014 and maybe for 2015 as well. That has not happened yet, and it now appears unlikely to happen at all. However, stay tuned for further developments. I will keep you posted.

roubini's edge

I may be best known for predicting the global financial crisis and the housing bust of 2008 — but I made another key economic prediction when I warned of major structural risks threatening the Eurozone in 2006. My remarks proved as prophetic as I'd feared. The crisis I predicted then is still casting shockwaves through the world economy, and may do so for generations to come...At the World Economic Forum in Davos, Switzerland that year, I said that imbalances in the Eurozone would come to a climax — which might lead to a disaster in Europe within 5 years. I made my remarks at a panel discussion on the “Ups and Downs of EMU” (European Monetary Union). The panel included several key European finance officials — including Jean-Claude Trichet, who was then president of the European Central Bank (ECB).

In a nutshell, I explained that some countries within the Eurozone — especially Italy, Portugal, and Greece — would experience weaker growth than the economically strong countries at the core of the Eurozone, such as Germany. This kind of economic divergence would be a major threat to a currency union like the Eurozone, where countries’ inflation rates and interest rates converge...As I was explaining all this, the Italian finance minister threw a temper tantrum: He interrupted my remarks and began shouting, "Go back to Turkey!" (The minister was making reference to my being born in Turkey — despite having spent two decades living in Italy.)

Unfortunately, by the Spring of 2010, many of the concerns I expressed during that panel discussion in 2006 turned out to be well founded. Let's take a look at some of the highlights — or, perhaps more accurately said, the low lights — of the last five years in the Eurozone to set the context.



As a consequence of these interventions and Band-Aids, the Eurozone has survived — but now, as we enter 2015, the Eurozone has a host of economic problems that emergency stopgap measures simply cannot fix. So what, exactly, is happening inside the Eurozone now? The problems of the Eurozone are, of course, complex, but for the sake of brevity let's take a look at a few of the most disturbing facts that seem to highlight the key difficulties that now exist there:



In fact, it would be fair to say that the Eurozone is just one shock away from outright deflation — a nightmarish state of affairs where a sustained lack of demand and economic growth causes prices to fall. Some people say Europe is going to get 'Japanified' — a reference to Japan's dismal economic performance over the last twenty years, which is sometimes referred to as 'The Lost Two Decades'. But, in fact, the risks in Europe are even worse. While the Japanese have stagnated, Japan has not suffered the sort of debt crisis that’s affected the Eurozone. This is because, unlike the Eurozone, the Bank of Japan has the flexibility and willingness to monetize debt and print money. It's much easier for a national, independent central bank to act to bail out one country than for Frankfurt to attempt to bail out the divergent economies of the Eurozone, where there is no easy one-size-fits-all monetary policy solution to save the day. Rather than get lost in the wonky math of the Eurozone, as macroeconomists so often do, I’d like to tell you about the challenges the Eurozone faces in a slightly more interesting way: By comparing it to a familiar organization of states—the United States of America.

The Eurozone & The United States

1) Rise of Extreme Political Parties

If the 20th Century has taught us anything, it’s that difficult economic times often lend themselves to political radicalism. Both the left and right seized this opportunity last century and wreaked havoc. The Bolsheviks rose to power after the Russian empire collapsed following economic decline and WWI. Enthusiasm for the National Socialists in Germany followed a prolonged and intense period of deflation and depression. Seventy-five years later, we would be wise to worry if it might happen again. Among the most troubling concerns on the horizon for the Eurozone is the rise of Eurosceptic extremist parties. Most of these parties tend to come from the political right, but there are examples on the left as well, such as Podemos in Spain or—more worrisomely—Syriza in Greece, a well-organized left coalition that is leading in polls and poised to win a majority in the upcoming election late in January.

Marine La Pen’s National Front party in France is a perfect example of how such extreme national movements must be taken seriously. For decades, the National Front was merely a nuisance, a hotbed for rightwing cranks and malcontents. Suddenly, in 2014, the National Front won a significant number of mayoralties, and their national numbers continue to grow. (In fact, if presidential elections in France, which are scheduled for 2017, were held today, current polls show that the National Front would win the first round.) They're no longer fringe—they’re now players in a very dangerous game. But, just as we saw in the 1930s, stagnation and insecurity breed resentment. When hard times hit, the public looks for someone to blame: foreigners, globalization, or budget cuts from Brussels. Even in Italy populist anti-Euro parties of the right and left could beat moderate centrist parties of the right and left if the current prime minister Renzi fails in his reform drive. We should not underestimate the potential power of these movements. The United States is not free of such disgruntlement, of course, but the Tea Party in the U.S. is now more of a nuisance and a political sideshow than a threat. In short, Europe has a very different kind of history — one it ought to take seriously.

2) Europe's Aging Population

Not long ago Jared Diamond popularized the phrase “geography is fate.” I would pair a phrase of my own beside this wise remark: demographics are fate too. According to a recent article in the Economist, in the next fifty years the working-age population of Europe will drop considerably, from last year’s peak of about 300 million to 265 million. This will be a significant blow to nearly every aspect of the Eurozone economy. At the same time, the old-age dependency ratio--a fraction or percentage expressing the ratio of residents over the age of 65 to those under that age--will rise from 28% (recorded earlier this decade) to a staggering 58% by 2060. This situation is, in a word, unsustainable. The causes of this challenge are in Europe are manifold: declining fertility, advances in old-age care, the residue of baby-boom demographics. But the impact will be serious.

The United States has managed to combat many of those challenges of an aging population through immigration. In the U.S., Immigrants now make up more than 13% of the total. population. In 2013, the number of immigrants living in the United States, both legally and illegally, topped 40 million. Immigration may help to mitigate Europe's aging challenge, as it has in the United States — and then again it may not. Immigration is a controversial topic in Europe — and it is one of the many issues that extremist parties in the Eurozone have seized upon to attempt to lend themselves legitimacy within their own cultures. Foreigners, after all, have always made easy targets for extremist political parties seeking to scapegoat others for their domestic economic woes in times of high unemployment.

3) Susceptibility to External Shocks

One of the reasons the Eurozone is more fragile than the United States is pure geography. America is surrounded by huge oceans, with relatively stable and like-minded countries to the north and south. Europe, on the other hand, is only a peninsula off the much larger and much less stable continent of Eurasia. And Africa and the Middle East are right there too, a short skip across the Mediterranean. Thousands of refugees drown in that sea trying to reach Europe each year. Pope Francis recently made reference to this tragedy when he described the continent as a “vast graveyard.” The aging population of Europe grows resentful of the influx. And because of a wide variety of social and historic reasons, Europe does not function as a melting pot, the way America, at its best, can do. (We see this drive toward assimilation in President Obama’s recent executive action, removing penalties for undocumented residents who aim to attain citizenship.) Whereas Germany, by contrast, contains plenty of Turks who have lived in that country for fifty years and still cannot apply for a German passport. They don’t feel like citizens. They can’t own a part of the dream. Europe still has not finished the task of absorbing the former Iron Curtain countries of Central and Eastern Europe within the EU. Problems there still persist—as recent events involving Mr. Putin have made clear. Eurasia is not an easy neighborhood in which to live. And because Europe cannot make centralized decisions to the same extent that a country like the United States can, coordinating responses to these periodic crises is always a struggle.

4) Labor Mobility & Capital Mobility

There is less labor mobility in the Eurozone than in the United States, since cultural barriers exist between nations with thousands of years of independent history. In the US, workers may flee a recession in North Carolina to seek work in the Northern cities. If there’s a bad shock in Michigan, people can pack up and move to New York. The borders are open between US states and the language is the same. Benefits are often portable. Whereas in the Eurozone, a number of obstacles prevent this. While there are mechanisms to allow for free movement between Eurozone countries, such as the establishment of the Schengen Area, which allows people to travel without passports between 26 European nations, the Eurozone still has a number of constraints that aren't present in the US which make movement more difficult. The Eurozone is a motley collection of competing languages, cultures, and legal restrictions. In consequence, Europe lacks the crucial shock absorber of a truly open labor market.

Since the time of Alexander Hamilton, the United States has had an integrated, federalized banking system which allows for the free flow of capital. This advantage has made the US a good deal more nimble and resilient than the Eurozone. While capital mobility exists in the Eurozone, there is not enough of it. Investing abroad in other Eurozone countries means navigating different tax systems, legal systems, often in different languages and cultures. As a U.S. citizen, if you live in Connecticut and want to buy stock in a California tech company, you don't even need to think about it. You don't have to call a different broker. You simply buy the stock. The absence of free movement of capital, in fact, is entirely alien to the American way of thinking.

5) Asymmetric Adjustment

Asymmetric adjustment is a wonky phrase but it’s fairly straightforward to understand. Basically, what it means is that there is an asymmetry between creditors and lenders, borrowers and debtors when it comes time to adjust to economic shocks to the economy. In the Eurozone, this means that countries that tend to spend too much (for example, Greece and Italy) and those that tend to save too much (for example, Germany and The Netherlands) both get hurt when the flow of money ceases. When a shock to the economy arrives, the lending tends to dry up. In this scenario, debtor countries are forced to spend less — but nothing forces the lending countries to adjust and save less. This is what is meant by the phrase 'asymmetric adjustment. For both sides, though, an unstable equilibrium is thrown out of balance. The so-called PIGS countries bristle against austerity, while the core countries, on the other hand, are left in the position of someone playing tug-of-war when the other side suddenly drops the rope.

In the U.S., such a scenario could never arise. We are one unified economy. It's difficult to even draw the same metaphor. New York may lend more money that West Virginia, as we know, but both are states are parts of the same union.

6) Great Recession Response

After the banking crisis of 2008, the United States did three crucial things that were required to fix the economy right.

Bank Recapitalization

First, The United States took the bull by the horns and recapitalized the banking system. The U.S. Treasury department committed trillions of dollars to support US banks and other financial institutions, such as investment banks, money market funds and credit unions. (While trillions of dollars were pledged to help the banks, far less capital was actually committed, and the government has collected billions of dollars in dividends and fees for their investment.) Once government capital was injected into U.S. banks, those banks could continue lending — as opposed to selling assets, deleveraging, or contracting credit. In addition, the Federal Reserve in the U.S. forced banks to engage in stress tests to determine their solvency. Five years down the line, the ECB eventually performed similar stress tests. But even after the stress tests, European banks don't have adequate capital, which means that if the banks need to shore themselves up, they are going to start retrenching and contracting credit — which risks further damage to the Eurozone economy.

Monetary Policy Second, the US did aggressive monetary and quantitative easing, while the ECB is now still thinking about doing quantitative easing. I've written before in Roubini's Edge about how monetary policy can help soften the blow of recessions and economic slowdowns but here I'd like to just focus on the big picture. By quadrupling the size of the money supply from its pre-recession levels, the Fed freed up desperately needed credit and helped keep the U.S. economy from crashing into a full-blown depression.

Back-Loaded Fiscal Consolidation Third, the US back-loaded its fiscal consolidation, meaning it postponed measures aimed at balancing its fiscal budget. (This is because, in the short run, raising taxes and cutting spending reduce disposable income and therefore reduce consumption.) In the Eurozone, however, the decision was made to front-load fiscal consolidation, which put additional pressure on their already beleaguered economies. This front-loading, which amounted to imposing budgetary austerity, reduced the total demand in the economy — the last thing the countries of the Eurozone needed at the time of a serious recession.

7) The Eurozone isn't a Fiscal Union One of the key challenges to the Eurozone is a lack of fiscal union. A fiscal union is something Americans take for granted and rarely think about. In the US, when there is a shock to the output of one of our fifty states, fiscal transfers from the rest of the union help to cushion the blow. As an example, let's say there is a negative shock to the economy of Texas, perhaps due to a fall in oil prices. Economic output in Texas would fall. But for every dollar in lost output, the fall in income in Texas isn't a dollar but only about 60-65 cents. Because when there are bad times in Texas the federal government transfers economic assistance there — on the premise that when there are bad times somewhere else, booming oil prices in Texas might help out another state in the union. It's a kind of risk pooling and insurance. In the scenario we've been discussing, Texans who were laid off from their jobs would be eligible for unemployment benefits. Those same unemployed Texans might also be eligible for federal welfare benefits. Also, when the earnings of Texans decrease due to bad economic times they would automatically pay less federal income tax. Conversely, when Texans are doing well, their federal taxes automatically rise. This serves as a kind of automatic stabilizer for the economy. Finally, the federal government can decide to cushion an economic shock to Texas by spending more money on Texan infrastructure or by funding federal projects at, say, the Johnson Space Center in Houston. In the U.S. those shock absorbers at the federal level are considerable, since the federal government accounts for 25% to 30% of our GDP. In Europe, where the EU government only accounts for 1% of GDP, there simply isn't capacity for it to lend substantive assistance when countries are in trouble . So what winds up happening in the Eurozone is that when you have a $1 shock to the GDP of one country, that country's income goes down, effectively, by $1. Unless there is a full fiscal union in the Eurozone — on spending, taxation, and even common debt issuance —the funds that the central government will have to assist countries in trouble will remain just spare change. Of course there are many reasons why citizens of some countries in the Eurozone don't want a fiscal union, which is a topic I will take up in the next section...

8) Banking Union: The Eurozone's Stumbling Block In the United States, we take for granted that every state in the union has banks that are insured by the FDIC. In Europe, however, German deposit insurance pays only for German banks, and Italian deposit insurance pays only for Italian banks. In the U.S., on the other hand, when a bank goes bankrupt in California, we use the same pool of money to fix the problem as we would for a bank that goes bust in New York. Furthermore, in the United States, we have a banking system where the Federal Reserve, at the central level, not at the state level, decides which banks are in trouble and need assistance, or in the worst case, require resolution. A banking union, in fact, is an important kind of risk sharing — a kind of subset of a fiscal union.

What concerns the Germans about a fiscal union — or, for that matter, a banking union — is that it pledges German citizens to support peripheral Eurozone economies and banks that are at risk of outright collapse. The fear in Germany is that risk-sharing will become risk-shifting — and that a fiscal union will become a transfer union. In short, Germany, and other core Eurozone nations like The Netherlands, don't want to get stuck in a transfer union where they might be forced to subsidize Portugal and Italy and Greece and Spain forever. Fiscal unions and banking unions only work when shocks occur randomly. (One day I have bad luck in Texas; the next day you have bad luck in New York. Sometimes I help you out; other times, you help me.) If the economies within a fiscal union are not balanced — it's not a two-sided risk-sharing alliance but, rather, a risk-shifting scheme where one side passes money to the other forever. That is why the Germans, among other core European nations, have been saying, in essence, unless the PIGS countries do reform in the form of fiscal austerity, structural reform, boost their growth, and make progress on avoiding future debt crises, we’re not going to sign on to a fiscal union or a banking union that may become an economic suicide pact.

9) Political Union — And Democratic Legitimacy in the Eurozone While Americans are accustomed to political squabbling — such as the commentary we hear from talking heads every presidential election about Red States and Blue States — the fundamental democratic legitimacy of American politics is rarely questioned by those within the political mainstream in the United States. Supranational unions like the Eurozone — at there very core — are about transferring national sovereignty to the center. In the case of the Eurozone, decisions that were once made at the national level get made at the supranational level. What was once decided by national legislatures of countries gets decided at the European Parliament in Strasbourg, France, while the executive powers of the EU are in Brussels within the European Commission. Decisions that were formerly handed down by national supreme courts get judged at The European Court of Justice in Luxembourg. And monetary policy that was executed by national central banks gets made by the ECB in Frankfurt, Germany.

What impact does this have on the political legitimacy of democracies?

If you are transferring national sovereignty from the nation state toward super-national authority, then you need a political union where those decisions being made at the super-national level are done in a democratic way. Otherwise, there are great challenges: For example the EU tells you that your country's budget is not acceptable and needs to be cut, or the ECB informs you that several of your national banks need to be shut down. Decisions on budgets and bank supervision have already moved away from national capitals to the central authority — but the risk sharing component of fiscal and economic union never arrived. You might say that countries like Greece have lost their sovereignty on supervision and regulation without truly receiving the benefits of solidarity, i.e. risk-sharing. Bureaucrats that were never elected by Greek citizens have begun making decisions that most Greeks would prefer to be made democratically in Athens, and many have already begun to blame their woes on the EU and the ECB and the Eurozone. The issue, of course, brings us back to where we began our list: The rise of extremist political parties within the Eurozone.

Beyond Greece — in Spain and Italy and France and The Netherlands — populist parties on the right and the left are rising. And their rage is being channeled toward many of the same targets that extremist politics railed against during The Great Depression: Against globalization, against immigration, against reform, against austerity. They are saying, "Enough is enough." So far, they have not come to power. But after five years of recession, low growth, high unemployment, little job creation, little income creation, more and more people have begun to say, "Enough is enough." As their voices grow louder, and the political legitimacy of the Eurozone is questioned in more places, those with a keen sense of history begin to worry about the causes that made Europeans feel powerless within the political order of the 1930s— economic depression, stock market shocks, the wrong monetary and fiscal policies leading to deflation — that led to Europe falling into the clutches of authoritarian regimes and culminating in the Second World War.

The Future of the Eurozone


...If Europe wants to avoid becoming the Florida of the world—a peninsula full of vacationers and retirees—then it must urgently consider radical reforms. All of the nine points noted above are worthy of serious action by policymakers. And all should be in the minds of investors considering taking a risk on the Eurozone and its future.

http://www.bloomberg.com/news/2015-01-06/free-money-in-bond-markets-shows-global-economy-still-struggling.html

The world’s richest nations are borrowing for free.

Taken together, the average 10-year bond yield of the U.S., Japan and Germany has dropped below 1 percent for the first time ever, according to Steven Englander, global head of G-10 foreign-exchange strategy at Citigroup Inc.

That’s not good news. The rock-bottom rates, which fall below zero when inflation is taken into account, show “that investors think we are going nowhere for a long time,” Englander wrote in a report yesterday.

If the global economy was picking up, then bond yields would reflect expectations that inflation would accelerate and riskier assets would prove more attractive. Instead, inflation is on the slide. JPMorgan Chase & Co. forecasts a global rate as low as 1 percent if oil remains below $60 a barrel.

http://www.bloomberg.com/news/2015-01-06/euro-area-economy-menaced-by-relapse-threat-as-ecb-weighs-action.html

A gauge of euro-area services and manufacturing signaled economic growth slowed in the final quarter of 2014, supporting calls for more stimulus by the European Central Bank.

A Purchasing Managers’ Index for both industries rose to 51.4 from 51.1 in November, London-based Markit Economics said today. While that’s above the 50 mark that divides expansion from contraction, the reading falls short of a preliminary reading of 51.7 published on Dec. 16. The data suggest the euro-area economy expanded 0.1 percent in the fourth quarter, Markit said.

“The euro zone will look upon 2014 as a year in which recession was avoided by the narrowest of margins, but the weakness of the survey data suggests there’s no guarantee that a renewed downturn will not be seen in 2015,” said Chris Williamson, chief economist at Markit. “The weakness of the PMI in December will add to calls for more aggressive central-bank stimulus.”

ECB officials gathering in Frankfurt tomorrow may discuss proposals for quantitative easing and the institution’s response to Greek elections three days after a Jan. 22 monetary-policy meeting. President Mario Draghi has signaled support for large-scale government-bond purchases, while governors including Bundesbank President Jens Weidmann favor not acting at this time.

http://www.bloomberg.com/news/2015-01-05/china-said-to-accelerate-1-trillion-in-projects-to-spur-growth.html

China is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year as policy makers seek to shore up growth that’s in danger of slipping below 7 percent.

Premier Li Keqiang’s government approved the projects as part of a broader 400-venture, 10 trillion yuan plan to run from late 2014 through 2016, said people familiar with the matter who asked not to be identified as the decision wasn’t public. The National Development and Reform Commission, which will oversee the projects, didn’t respond to a faxed request for comment.

The move illustrates concern among officials that China’s planned shift to a domestic-consumption driven economy has yet to produce enough growth momentum. The yuan rose, halting a two-day decline, and Australia’s dollar -- a proxy for China due to its shipments of iron ore and other commodities used in construction -- climbed after the news.

“It’s part of China’s efforts to stabilize growth, and the news will help to boost market confidence,” said Julia Wang, a Hong Kong-based economist with HSBC Holdings Plc. “Infrastructure investment will continue to be a major driver for China’s economic growth.”

http://www.bloomberg.com/news/2015-01-05/deepening-oil-rout-seen-forcing-norges-bank-rate-cut.html

As oil drops below $55 a barrel, speculation is growing that the central bank of western Europe’s biggest crude producer will need to cut rates again.

A 54 percent slump in Brent crude since a June high has pummeled the offshore industry in Norway, where oil and gas make up 22 percent of gross domestic product. Over the same period the krone has lost about 20 percent against the dollar and 8 percent against the euro. The OBX benchmark stock index is down about 12 percent.

The central bank delivered a surprise rate cut last month it said was triggered by plunging crude prices. Since then the oil price development has proven even worse than the central bank anticipated. In an interview yesterday, Governor Oeystein Olsen said $55 oil is “clearly lower” than expected in December.