Mish's Global Economic Trend Analysis

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• Political Pandering by Mitt Romney in Iowa Regarding Ethanol from Corn
• Violence in Bracelona: Police Break Up Protesters With Clubs, Rubber Bullets
• ECB Board Member Says Greece Can Raise $429 Billion Selling Assets; Greece’s Papandreou Vows to Press Austerity, Says Greece "Soon Out of the Woods"

Political Pandering by Mitt Romney in Iowa Regarding Ethanol from Corn Posted: 28 May 2011 10:33 PM PDT In contrast to what many believe, I do not support political parties. I support and vehemently defend policies that make sense, and attack those that don't. In case you did not know that, I am going to surprise you with a blast of Republican presidential candidate Mitt Romney who is pandering to the Iowa farmers with a message "I Support the Subsidy of Ethanol". On his first trip back to the nation's first voting state as a soon-to-be declared presidential candidate, former Massachusetts Gov. Mitt Romney reaffirmed his support for federal ethanol subsidies -- an always important campaign issue in Iowa that figures to take on an even more central role in the divided GOP field. "I support the subsidy of ethanol," Romney told a potential voter after an event here was cut short by a fire alarm. "I believe ethanol is an important part of our energy solution in this country." Support for ethanol subsidies has long been considered a political necessity for candidates who want to succeed in the Iowa caucuses, but former Minnesota Gov. Tim Pawlenty tested that maxim on Monday during his official campaign announcement here. "The truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out," Pawlenty said. "We need to do it gradually. We need to do it fairly. But we need to do it." Pawlenty was widely praised in fiscally conservative circles for taking a stance against the subsidies, which cost taxpayers about $5 billion in 2010, while former House Speaker Newt Gingrich has been singled out for criticism by influential conservative media outlets, including the Wall Street Journal editorial board, for his vocal support of subsidized ethanol. Romney supported ethanol subsidies during his unsuccessful 2008 presidential run, in which he largely banked on winning the Iowa caucuses but finished a disappointing second to former Arkansas Gov. Mike Huckabee. Political Pandering Dave, a friend of mine, sent me the above article and said "what a whore". By the way, Dave is a Republican. He voted for McCain in the last election (I wrote in Ron Paul). We need more Republicans like Dave willing to voice their criticism because that is the only way we are going to get change. Here's the deal. Either Romney is a whore or he is ignorant. He could be both. Romney may be far better than Obama, but that is beside the point. The point is ethanol from corn makes no sense. Ethanol from corn costs energy to produce and is only viable because of government subsidies. Ethanol from sugar cane makes sense, but the US has tariffs on Brazilian ethanol in order to support inefficient, energy wasting ethanol from corn. Remove Tariffs, Legalize Hemp Want to lower gas prices? Then remove tariffs on ethanol. If you want biofuels, then legalize hemp. Hemp needs no fertilizer, its fiber is softer than cotton, its seeds high in oil content, and it grows on poor soil. Those are admirable properties. Does that make hemp viable for biofuels? I suspect so, but to be truthful, I just don't know. What I do know is if we get government subsidies out of the way and end needless regulation, the free market will find a way. Get Rid of Big Government Republican candidates ought to be supporting free market, small government policies. Instead, it is very disheartening to see Romney whoring Iowa voters on the same big government subsidy side as president Obama. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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.

Violence in Bracelona: Police Break Up Protesters With Clubs, Rubber Bullets Posted: 28 May 2011 02:18 PM PDT Peaceful protests in Spain have come to an end as Police fire rubber bullets at protesters in Barcelona Spanish police fired rubber bullets and swung truncheons to disperse anti-crisis protesters in a Barcelona square Friday as cleaning crews cleared their tent camp. Catalan police in anti-riot gear moved in after about 50 protesters sat down on the street to block a convoy of cleaning trucks leaving the Plaza de Cataluna square with remnants of the encampment. Police, some with plastic shields, were shown on television dragging protesters along the street and swiping with truncheons at activists, who had been chanting: "They shall not pass." Demonstrators chanted: "The people, united, will never be defeated!" and "No to violence!" Cleaning crews with 10 lorries dismantled the last of the tents under police surveillance. Later, police left the square and let thousands of demonstrators flood in. By the evening, at least 5,000 people were in the square protesting against the police intervention, some having put up tents. A dozen police vehicles were in streets leading to the square. "What happened today was awful but it is a warning" for the country's leadership, said Ramon Deltran, 50, a psychiatrist. "This is what police brutality achieves, that much more people protest. But also it is the fault of the politicians who don't listen to us," said Maite Loureiro, 30, an unemployed designer. In Madrid's Puerta del Sol square, hundreds of demonstrators, many carrying flowers, shouted "Barcelona is not alone." Violence in Barcelona Link if above YouTube Video does not play: Indignats | Desallotjament de la Plaça Catalunya There are also more videos and comments at the above link. The New York Times has still more videos and commentary in Police Clash With Protesters in Barcelona El País newspaper reported that 121 people were lightly injured, including 37 police officers, "as the result of a police charge" on the protest camp. Video posted on the Web site of 20minutos, a Spanish news site, showed the officers charging at protesters. Citing a spokesperson for the authorities, who would not be named according to Catalan policy, Bloomberg News reported that about 300 people had been removed from the square. The authorities said that police had left the area by 1 p.m. El País reported that protesters had returned to the square. Just a few hours after the arrival of police officers, protesters were passing out fliers decrying their behavior, and calling for people to return to the square at 7 p.m. to protest. On Twitter, an appeal went out for protesters to "bring flowers" when they returned. In the square and elsewhere in the city, there has been a nightly banging on pots and pans at 9 p.m. to show support for the movement. Update: Here is a photograph of Plaça Catalunya taken by a reader, Víctor Riverola, at 7 p.m. local time on Friday evening showing that thousands of protesters returned: Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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.

ECB Board Member Says Greece Can Raise $429 Billion Selling Assets; Greece’s Papandreou Vows to Press Austerity, Says Greece "Soon Out of the Woods" Posted: 28 May 2011 11:32 AM PDT ECB member Juergen Stark says Greece may raise up to 300 billion euros from selloffs. The ailing euro zone state, whose debt burden stands at around 330 billion euros, currently aims to raise 50 billion euros from privatizations by 2015 to help stave off a fiscal meltdown. "The Greek government has shares in listed companies, it owns real estate. Experts estimate the sales potential at up to 300 billion euros," Stark told the newspaper according to a prerelease from its Sunday edition. "(Greece) needs to intensify its efforts," Stark also said. "(The privatization program) is meant to raise 50 billion euros by 2015 and one should be more ambitious here." Greece's Papandreou Vows to Press Austerity In spite of stiff opposition, Greece's Papandreou Vows to Press Austerity Greek Prime Minister George Papandreou said he'll press ahead with new austerity measures after failing to win backing from the main opposition parties as he races to keep bailout funds flowing and avoid default. Antonis Samaras, leader of Greece's biggest opposition party, New Democracy, rejected the plan at a meeting with Papandreou and other opposition leaders in Athens, saying his party wouldn't be blackmailed. Papandreou said he will go ahead with the measures even while continuing to seek support and ruled out early elections. "My determination is to continue with this program in a very determined and decisive way," Papandreou said today at a press conference in Athens. Greece has achieved "impressive" targets and there are signs of improvement in the economy, he said, adding that the country will "soon be out of the woods" by following through with plans for fiscal adjustment, state- asset sales and development of government-owned real estate. European Union officials have called for consensus on the package, which includes an additional 6 billion euros ($8.6 billion) of budget cuts and a plan to speed 50 billion euros of state-asset sales, before approving more aid that Greece needs to avoid default. The wage cuts and tax increases Papandreou has imposed under a 110 billion-euro bailout last year have prompted strikes and protests, complicating efforts for compromise on the new plan. Out of the Woods? If Greece has a debt of 330 billion euros but can get rid of 300 billion euros of it by selling assets, then why does Greece need more aid? Has Greece all of a sudden turned a solvency problem back into a liquidity problem? Color me skeptical. If it was so easy, why hasn't it been done? I sense a bazooka bluff statement from Stark hoping to buy more time. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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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