Mish's Global Economic Trend Analysis

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• Robots Don't Commit Suicide (and Other Robot Advantages)
• Half of Detroit Properties Have Not Paid Taxes; Update on Detroit Bankruptcy
• Beppe Grillo Surges in Last Minute Rush; Is That a Good Thing?

Robots Don't Commit Suicide (and Other Robot Advantages) Posted: 23 Feb 2013 10:11 PM PST Robots don't eat, drink, demand coffee breaks, or protest working conditions. And they certainly don't commit suicide. Following a wave of suicides in China, one at Foxconn where a worker twice attempted to kill himself and succeeded the second time, Foxconn suspended hiring, deciding to use more robots. Electronics manufacturer Foxconn has halted recruitment in China, which it claims is due to plans to further automate processes, amid speculation of a reduction in production demand by its key client Apple. In fact, the recruitment freezes among Foxconn this time is due to its long pronounced plans to install million robots to replace human, Chinese newspaper Beijing News reported on Wednesday, citing unidentified employees. Foxconn chairman Terry Gou had ordered all factories in China earlier this year to beef up automated manufacturing processes by using more robots. According to the report, if any factories plan to conduct large-scale recruitment, it will need his personal approval. In June 2011, Gou announced the company would deploy one million robots across factory assembly lines within three years. The move will improve production efficiency and combat rising labor costs, and is also believed to be in response to a spate of suicides and criticism over working conditions at the company. Get rid of a million workers, replace them with a million robots, and you get rid of a million complaints about working conditions, as well as unwanted, high-profile, work-related suicides. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Half of Detroit Properties Have Not Paid Taxes; Update on Detroit Bankruptcy Posted: 23 Feb 2013 08:04 AM PST The hollowing out of Detroit is nearly complete. All that's left is a bankrupt shell of a city with no services and scattered citizens that do not pay taxes. The Detroit News reports Half of Detroit Property Owners Don't Pay Taxes Nearly half of the owners of Detroit's 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis, according to a Detroit News analysis of government records. The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city's taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library. Delinquency is so pervasive that 77 blocks had only one owner who paid taxes last year, The News found. Many of those who don't pay question why they should in a city that struggles to light its streets or keep police on them. "Why pay taxes?" asked Fred Phillips, who owes more than $2,600 on his home on an east-side block where five owners paid 2011 taxes. "Why should I send them taxes when they aren't supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came." Update on Detroit Bankruptcy Detroit is financially and morally bankrupt yet the governor refuses to make that declaration. A Review team says Detroit faces financial crisis, has no plan to fix it so why won't the governor act? For the second time in a year, a state review team has found Detroit is in a financial emergency that requires Gov. Rick Snyder to intervene in City Hall. But this time, if Snyder agrees that a financial emergency exists, the governor's choices are more limited. He could appoint an emergency manager to keep Michigan's largest city from plunging into bankruptcy, experts say, or he could continue state financial supervision through a new consent agreement, which seems a faint possibility. State Treasurer Andy Dillon ruled out a bankruptcy filing at this time. The six-member review team unanimously concluded in a report released Tuesday that the city failed to restructure its debt-laden bureaucracy under the financial consent agreement signed in April and that Detroit's financial crisis requires Snyder's intervention "because no satisfactory plan exists to resolve a serious financial problem." Chapter 9 bankruptcy is "always a possibility but I don't think the city should go through (Chapter) 9 to cure its ailments," he added. The review team said the city's charter adds "numerous restrictions" and hurdles for closing departments, canceling contracts and the type of wholesale restructuring financial experts say is necessary to make city government live within its means. Restrictions? Who Cares? In bankruptcy, restrictions go out the window. So do union contracts and pensions. Since all of that needs to go out the window, what's holding the governor back? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Beppe Grillo Surges in Last Minute Rush; Is That a Good Thing? Posted: 22 Feb 2013 11:39 PM PST Reader "AC" who is from Italy but now lives in France informs me that the Italian elections this weekend are getting even more interesting. Specifically, "AC" writes "Grillo claims 800,000 assisted at his closure meeting in Rome with another 150,000 via streaming. My feeling is that there will be a huge turnout for Grillo in the election". Joe Weisenthal on the Business Insider writes "I Have Seen The Scariest Chart In Europe". The chart Weisenthal refers to is from Google Trends. It shows a surge in searches on Beppe Grillo. Weisenthal says ... Grillo is a comedian-turned-politician who is doing shockingly well the Italian elections (coming up this Sunday and Monday) by running on an aggressive anti-bank, euro-skeptic platform. He's capitalizing on the deep frustration that exists in Italy due to the weak economy, and the perception that the current government is too corrupt and cozy with banks. Were he to gain a sizable block in the upcoming parliament, he represents a pretty serious threat. A threat? A Threat to What? Grillo wants Italy to vote on whether or not to stay in the Eurozone. On that score I happen to agree. The sooner the eurozone splinters the better. Greece would be better off if it left four years ago and Spain would be better off if it left now. That does not mean I endorse all the policies of Grillo, and indeed I don't. My point is that huge change is desperately needed. As I have stated on many occasions "Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the "bail out" debt foisted on their country to be null and void. That person will be elected." The scare should not be that a breakup happens, but rather that the inevitable is delayed with grave consequences. Scariest Chart Ever? Weisenthal calls that the scariest Europe chart ever. Assuming the chart does represent an increasing interest in Beppe Grillo, I call it a necessary trend on the path to rebalancing Europe. For more on the election in Italy, an explanation of Beppe Grillo's "5 Star Movement" and some election predictions, please see European Reader Offers Insights on Upcoming Italian Election Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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