World View: Ukraine to Sign Trade Deal with European Union on Friday

World View: Ukraine to Sign Trade Deal with European Union on Friday

This morning’s key headlines from

  • 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

It’s assumed that Boko Haram is responsible for the suicide carbombing on Wednesday that caused a massive explosion in a shoppingmall in Abuja, the capital city of Nigeria, killing at least 21people and scattering body parts around the plaza. It seems thatNigeria’s government and army can do nothing to stop the repeatedattacks, 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 hadabducted 90 more women in addition to the 200+ schoolgirls 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 thelast seven months was the last-minute flip-flop by then-presidentViktor Yanukovych, who had promised to sign a trade deal with theEuropean Union, only to ditch the EU deal and go with a trade deal withRussia. 

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

A three-party meeting of the EU, Ukraine and Russiais expected to take place at the ministerial level in July. EUTrade Commissioner Karel de Gucht, Ukrainian Economy MinisterPavel Sheremet and I will meet to discuss risks that will emergeover the implementation of this agreement and possible measures tooffset these risks.

Ulyukayev says that from Russia’s point of view, there aretwo groups of problems: 

  • Since imports into Ukraine form 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. 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 oneverything from turkeys to tulips, cheese to machinery. Itar-Tass (Moscow) andCanadian Broadcasting

Stocks rise after disastrous GDP report

The stock market rose on Wednesday after the Commerce Departmentrevised its estimate of GDP growth from the first quarter, originallyreported to be an anemic +1.0%, to a disastrous fall of 2.9%. Thenearly 3% contraction in the economy during the first quarter is beingblamed variously on the weather and Obamacare. According to oneestimate, indirect taxes from Obamacare are the highest tax increasein decades. 

Mainstream economists were shocked by this report. Every quarter,they predict that the economy’s growth will start to surge in the nextquarter, just as it did after recessions in the 1970s, 80s, and 90s.But as I’ve pointed out many, many times, mainstream economics didn’tpredict and can’t explain the tech bubble of the 1990s, didn’t predictand can’t explain the huge credit and real estable bubble of themid-2000s decade, and the real estate collapse and credit crisis after2007.  They didn’t even know that there’d been a real estatebubble until around 2009, two years after it had started to burst. 

Mainstream economists didn’t predict and can’t explain any of thoseevents. They don’t have a clue what the economy is going to do thisyear and even less of a clue about next year. 

What they don’t understand is that a return to the 1970s-90s is100% impossible. That was a different generational era. Fromthe point of view of Generational Dynamics, the mood and behaviorof people today matches the 1930s, not the 1980s, which meansthat 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 thatinvestors were happy about the disastrous GDP data was that it meansthat the Fed will continue its program of “printing” tens of billionsof 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.

KEYS: Generational Dynamics, Nigeria, Boko Haram, Abuja,Ukraine, Viktor Yanukovych, Petro Poroshenko,Alexei Ulyukayev, European Union, Commerce Dept. 

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