The Spanish economy has been undergoing a process of labor market reforms in a bid to boost its competitiveness and stimulate growth after years of recession.  Spain posted positive growth for the first time in over two years in the second half of 2013 and is expected to grow by 1.6 pc in 2015, according to the OECD.  However, unemployment continues to be stubbornly high, and at 23.7pc is still the second worst in the single currency area after Greece.  Spain’s deputy labor minister Engracia Hidalgo said the numbers were evidence the country's labor market reforms, which make it easier for companies to hire and fire employees, are beginning to bear fruit.   The biggest fall in unemployment came in the services sector where joblessness was down by 65,275 people, or 2.2pc. Unemployment rose in the construction and industrial sectors. .. Spanish unemployment has recorded the sharpest drop since the country adopted the euro in 1999, in a further sign the economy is managing to get a hold on its joblessness problem.  There was a fall of more than 253,000 in registered unemployment from December 2013 to December 2014, an annual decrease of 5.39pc and the biggest since the country joined the eurozone, according to government figures.  Monthly jobless claims also fell by 64,405 for the last month of the year, representing the second largest December decrease on record ... Meanwhile, the number of people registering as in work rose by 417,000 in 2014 compared, the first annual increase since 2007.

China will relax restrictions on banks' yuan trading from next year, in a small but significant move toward relaxing its capital controls.  The changes will replace daily caps on banks' foreign exchange positions with weekly limits, and for the first time establish unified standards for total foreign exchange positions that banks can hold.  The State Administration of Foreign Exchange published a set of new rules on Tuesday to simplify 14 sets of related regulations and add new provisions liberalizing banks' forex trading practices.  "The timing is well chosen," said a senior dealer at a major European bank in Shanghai.  "With the dollar strengthening globally and emerging market currencies suffering from lingering weakness, it is a good time to relax restrictions."

The yuan has lost 1.3 percent so far this month and looks set to close the year down 2.8 percent in the face of bearish pressure, which is expected to last well into 2015.  Starting Thursday, the SAFE will check banks' position compliance status each week, according to the rules published on the regulator's website, www.safe.gov.cn, leaving them leeway to short dollars within that period, traders said.  However, the SAFE appeared to discourage this interpretation in its statement.

"While banks manage their positions on a weekly basis, their average daily positions should be kept within the limits defined by SAFE," the regulator said, in what traders said was an apparent signal that banks should not go too far.  While position caps for shorting dollars will remain unchanged, the SAFE has published standards for total forex positions that will apply to everyone.

Banks previously needed to apply for quota individually.   All banks with less than $100 million worth of forex settlement business in the previous year will be allowed total positions of $50 million on average by the end of each day in a week, with a maximum short position value of $3 million, according to the new rules.  Those recording a value between $100 million and $1 billion will be granted total positions of $300 million and short positions of $5 million.

Those doing more than $1 billion of business can have total positions of $1 billion and short positions of $10 million.  "Those banks that cannot meet their business demand via the above-mentioned positions can apply to SAFE for additional quotas," the regulator said.

The rules also apply to China-based foreign banks; overseas lenders that have more than one office in China must appoint one key office to manage the positions, the rules said.

The leading oil producer in Latin America, Venezuela, was meanwhile negotiating another big loan with China, as it takes a battering from the price drop and its own planned economy. While Venezuelan President Nicolás Maduro was in Beijing on , the daily El Nacional reported that China had already lent Venezuela more than $50 billion since 2007, though about half of that had been written off. Every Venezuelan it noted, owed China over $761. In oil-rich Mexico, experts were observing that the state may well have to envisage smaller budgets for several years, not just this year, as Mexico's own export blend may end up costing around just $30 a barrel. Milenio newspaper cited the Senate President Miguel Barbosa as suggesting that the cabinet should start drafting "austerity" plans — a word rarely heard in Mexico. The South China Morning Post reported on the economic stakes of the visit of Latin American leaders in China, although the Hong Kong daily also noted that the first windfall of lower oil prices could be felt in the air: lower costs for the world's airlines.  Analysts around the world widely agree that the most notable new factor in the current trend in energy production is the flood of mostly American-extracted shale gas into the market.  The Guardian notes that U.S. oil production has increased 48% over the past five years, which was originally offset by drops elsewhere. But as demand has also abated, prices have dropped, and may continue downward. Stephen Schork, a U.S.-based market analyst, told the London daily that investor “psychology” is driving oil trading. “We could get a rebound to $70 but we could see $30 before we see $70.”  The political ramifications weigh in the most immediate way on Russia, which may have to reconsider its aggressive policy towards  Ukraine, as it suffers the effects of both "western" sanctions and the sustained drop in oil prices.

Brussels is bent on destroying the private sector - apart from the European conglomerates. We will become like Russia - controlled by the State and a few oligarchs in hock to the leaders. The agenda is of course to destroy the independence of the States that make up the EU and what better way, than by destroying their independent businesses.  Hopefully Europe, the sick old man of the global economy, quietly shuffles off into further isolation and less prominence, with a whimper and not a bang. If European history of the last 2 centuries is of any indication however, that may prove to be wishful thinking. These verbose toffs may look effeminate to American eyes, but they have a peculiar genius for slaughtering each other and much worse, dragging every one else into the fray with them...It probably won't play-out quite as bloodily as in the past, but it could all be just as damaging when all is said and done, I'm afraid....If I remember rightly, I read somewhere (probably in the DT) that a senior member of the Saudi government had declared the country's intention to maintain current production even if the price of oil fell to $20 a barrel -- hence, presumably, the headline of this article....Motivation? Well, the high price of oil for the last number of years, driven in large part by the rapidly expanding Chinese economy, has motivated the exploitation of previously unviable sources of oil, as well as the development of shale, and the development of new technology in engine fuel economy. This wasn't a problem as long as the Chinese were prepared to buy whatever oil the world could produce, but now that the Chinese economy's expansion is slowing, they need less oil, which means there is now a glut. Saudi, which can produce it relatively easily and cheaply, has an opportunity to regain market share and put the kibosh on all the new technologies....If the long term average is $60/bbl, why would it drop to $20/bbl this year? $20/bbl in today's money doesn't compare at all with $20/bbl 15 years ago - this is a silly assumption. Similarly, $100/bbl oil price won't cause a revolution in major oil producing countries, $20/bbl risks widespread budget defects and revolution's. The ruler's of Saudi Arabia and their ilk have enough domestic issues to allow a low oil price to add to it. The US will not allow Saudi Arabia to persist with low oil prices indefinitely, they have a shale industry to protect. If the last goodness knows how many years has shown anything, it is that America survives on protectionism and aggression to protect its economy.

Faced with Angela Merkel’s categorical rejection of Eurobonds, the EU engaged a horde of financial specialists to find a creative way to circumvent it. They came up with the EFSI. Though the fund will not be operational until mid-2015, EU member countries have already proposed projects for the European commission’s consideration. By early December, all 28 EU governments had submitted applications – and they are still coming.  An assessment of the application documents conducted by the Ifo Institute for Economic Research found that the nearly 2,000 potential projects would cost a total of €1.3tr, with about €500bn spent before the end of 2017. Some 53% of those costs correspond to public projects; 15% to public-private partnerships (PPPs); 21% to private projects; and just over 10% to projects that could not be classified.  The public projects will presumably involve EFSI financing, with governments assuming the interest payments and amortization. The PPPs will entail mixed financing, with private entities taking on a share of the risk and the return. The private projects will include the provision of infrastructure, the cost of which is to be repaid through tolls or user fees collected by a private operator.  Just like the many other “protective” measures taken during the crisis, this distortion of market processes will help to cement the sub-optimal allocation of European investment capital, hampering economic growth for years to come.  Making matters worse, only a fraction of the new borrowing enabled by the mutualisation of liability will be factored into national budgets. This will render EU-wide debt-management agreements meaningless, including the stability and growth pact, which limits the overall deficit to 3% of GDP, and the 2012 “fiscal compact,” which stipulates that countries whose debt-to-GDP ratios exceed the 60% limit should reduce them by one-twentieth annually, until they are in compliance. (Hans-Werner Sinn)

Italy’s manufacturing sector shrank at the fastest rate in more than a year-and-a-half according to the Markit PMI.  The headline index of activity fell to 48.4 last month from 49 in December, where anything below 50 signals contractions. It was the lowest in 19 months and the third successive month of contraction.  Manufacturers shed staff at the fastest rate in more than a year-and-a-half. The one bright spot to the report was a continued growth of orders from abroad.

Phil Smith, economist at Markit:The manufacturing sector’s performance has deteriorated throughout the final quarter, with the PMI posting its worst reading for 19 months in December. Factories have cut back production amid falling intakes of new orders, particularly among domestic clients, and this trend looks set continue as new business fell to the greatest extent for over a year-and-half in December and backlogs were depleted sharply. Without the support from export sales, the situation would be worse still...

Mario Cuomo, the golden-tongued son of Italian immigrants who rode his liberal views and hard-nosed political acumen to the pinnacle of Democratic politics as New York’s governor but repeatedly shunned a run for the White House, died Thursday at the age of 82.

Quantitive Easing is just distribution of money from the poor to the rich !

2015 will show the complete collapse of the Western world we have known since 1945. It will be a gigantic hurricane, which will blow and rock the whole planet, but the breach points are to be found in the “Western Port”, which hasn’t been a port for a long time but, as will be clearly shown in 2015, has been in the eye of the storm in fact, as we have repeatedly said since 2006. Whilst some boats will try to head offshore,  the Ukrainian crisis has had the effect of bringing some of them back  to port and firmly re-mooring them there. Unfortunately, it’s the port itself which is rocking the boats and it’s those with the strongest  moorings which will break up first. Of course, we are thinking of Europe first and foremost, but more so Israel, the financial markets and world governance.....Come on guys.. Look the similarity of the so called Wirtschaftswunder in Germany after the WWII and the current hate to the €uro currency in the Anglosphere...."Wirtschaftswunder (German for "economic miracle") describes the rapid reconstruction and development of the economies of West Germany and Austria after World War II (adopting an Ordoliberalism based social market economy). The expression referring to this phenomenon was first used by The Times in 1959.[1]  Beginning with the replacement of the Reichsmark with the Deutsche Mark as legal tender (the Schilling was similarly established in Austria), a lasting period of low inflation and rapid industrial growth was overseen by the government led by German Chancellor Konrad Adenauer and his Minister of Economics, Ludwig Erhard, who went down in history as the "father of the German economic miracle." In Austria, efficient labor practices led to a similar period of economic growth."... Bear in mind the EU is anti democratic.  Its powers are centralized and in the hands of the few.  Examples: Merkel stage managed Juncker becoming  chief commissioner and he, in turn, appointed the others.  The central bank dictates fiscal policy.  The EU even wants a centrist defence policy.  In truth the euro cannot survive long term because it defies  bedrock economics. The interactive, social, daily  value of any currency finds its own level.  Greece will be better off outside the EU in the medium  and longer term.  With a naturally evolving currency.....And now, the big lie - :
There are concerns….once deflation actually takes hold there is no stopping it….until all debt is destroyed….this would be a ghastly ghastly human catastrophe…social welfare states would collapse plunging millions upon millions into untold misery…it might already be too late to stop deflation…there is no evidence that quantative easing actually always solves the structural problem of too much debt - rather it might just delay the great reckoning of too much debt…meaning the destruction of debt by default or hypo inflation...   In brief: The banks loaded everyone up with so much debt that it can't be repaid even at zero rates. The owners of that debt (the rich) won't take a haircut on their "investment". So they need to sell the debt to the public indirectly, via the central bank. Meanwhile if everyday prices show a hint of dropping and making people's lives easier (deflation!), even more money must be given to the banks and the wealthy. And if at some point wages show a hint of rising and making people's lives easier (inflation!), interest rates will rise. Nice system isn't it? I wonder who profits most from this arrangement. It should be simple enough to work out: look around and see who has all the money. It's not us.