Mish's Global Economic Trend Analysis

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• Americans Prefer Spending Cuts Over Tax Hikes; Obama Throws Fat Pitch, Republicans Will Not Even Step Up to the Plate
• More BullSweet Stress-Free Tests of European Banks
• Zepol: U.S. Imports Down 7.4% in June, Big 3 Postpone New Transpacific Service; Soft Patch or Prolonged Global Slowdown?
• Italian, Spanish Bond Yields Head North, Greek, Irish Bond at New Record Highs

Americans Prefer Spending Cuts Over Tax Hikes; Obama Throws Fat Pitch, Republicans Will Not Even Step Up to the Plate Posted: 15 Jul 2011 06:09 PM PDT A Gallup poll shows On Deficit, Americans Prefer Spending Cuts; Open to Tax Hikes Americans' preferences for deficit reduction clearly favor spending cuts to tax increases, but most Americans favor a mix of the two approaches. Twenty percent favor an approach that relies only on spending cuts and 4% favor an approach that uses tax increases alone. Overall Results - Any Political Affiliation Both Republicans and Democrats appear willing to raise the debt limit, provided the government outlines plans to significantly reduce federal deficits in the future. The parties generally agree on making deep spending cuts, but do not agree on whether tax increases should be included to help reach their target goals for deficit reduction. Many Republicans in Congress oppose any such tax increases; thus, the legislation may not pass if tax hikes are included. Americans do not necessarily share this view, with 20% saying deficit reduction should come only through spending cuts. That percentage is a little higher, 26%, among those who identify as Republicans. Republicans do, however, tilt heavily in favor of reducing the deficit primarily if not exclusively with spending cuts (67%) as opposed to tax increases (3%). Fifty-one percent of independents share that preference. Democrats are most inclined to want equal amounts of spending cuts and tax increases (42%), though more favor a tilt toward spending cuts (33%) than tax increases (20%). Results by Political Party The question does not make clear what types of tax increases Americans might be willing to accept, or whether those saying deficit reduction should come "mostly" from spending cuts would prefer that the proportion of spending cuts be closer to 51% or 99%. The public has been willing to endorse higher taxes on wealthy Americans in recent months, in terms of allowing Bush-era income tax cuts to expire and as a means of keeping Social Security solvent. Republican Voters Open to Compromise There are other questions in the survey including questions on "why" people are concerned about the debt limit. Inquiring minds may wish to give the link a closer look. The interesting factor to me is that only 26% of Republicans say the budget should be balanced only with spending cuts. Among the Democrats, only 8% say it should be done only with tax hikes. The key take-away is Americans from both parties are willing to accept a budget balancing process that is weighted towards spending cuts as long as there are some tax hikes. Congress is not open to the same viewpoint. As I said, I am open to compromise as long as the cuts are genuine, the cuts are not back loaded, and as long as some other key items are tossed in the mix, such as scrapping Davis-Bacon and ending collective bargaining of public unions. The US would benefit greatly from such an approach. Unfortunately, Republicans are willing to piss away a golden opportunity to present such a plan in favor of plans that will likely not reduce the deficit at all. Obama Throws Incredibly Fat Pitch Obama says he is ready to make hard choices. I suggest Republicans should put him to the test. Obama offered up a fat pitch that Republicans can hit out of the park. All Republicans have to do is insist on ending collective bargaining rights of public unions and scrapping Davis-Bacon in return for very modest tax hikes. Such a deal would be well worth it. Republicans would even win if Obama rejected it. Sadly, Republicans will not play ball at all. 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.

More BullSweet Stress-Free Tests of European Banks Posted: 15 Jul 2011 10:23 AM PDT Ho Hum. EU officials have announced the results of more Stress-Free bank tests in Europe. 20 banks were expected to fail, only 8 did. Please consider 8 Banks Fail EU 'Stress Tests' Eight banks flunked the European Union's "stress tests," with a combined shortfall of €2.5 billion ($3.54 billion) in capital under a simulated worst-case economic scenario, the European Banking Authority said. The EU regulator said Friday that another 16 banks narrowly passed the tests, which examined the abilities of 90 top lenders across Europe to endure a deteriorating economy and strained financial system. By awarding a relatively clean bill of health to the vast majority of Europe's banking industry, the tests are likely to be greeted with skepticism. Analysts and investors were bracing for as many as 20 banks to fail and to need to raise tens of billions of euros of new capital. Last year's tests, widely discredited for being overly lax and inconsistently enforced, saw seven lenders fail, with a combined capital deficit of €3.5 billion. Spain, whose economy and banking system are reeling from a collapsed real-estate market, is home to the largest number of failures, with five banks dipping beneath the 5% threshold, the EBA said. Another seven Spanish lenders barely passed, with capital ratios between 5% and 6%. Two Greek banks and one Austrian bank also failed the tests, the EBA said. In addition to Spain, the countries with banks that nearly failed are Cyprus (one bank), Germany (two), Greece (two), Italy (one), Portugal (two) and Slovenia (one). In Ireland, which had to accept an international rescue last fall after its banking system imploded, all three of the tested banks easily passed the tests. "The European bank stress tests this year have done a poor job of building confidence," said Heinrich Haasis, president of the German Savings Banks Association, in a statement Friday. "The task now is to ensure that no additional uncertainty affects the markets." Did the stress tests include a Greek default? What about Irish, Portuguese, or Spanish defaults. What exactly was stressed? The answer to those questions is no. Here is the Executive Stress Test Summary The stress test exercise. The 2011 EBA's EU wide stress test had the objective of assessing the resilience of a large sample of banks in the EU1 against an adverse but plausible scenario. The scenario assesses banks against a deterioration from the baseline forecast in the main macroeconomic variables such as GDP, unemployment and house prices – for instance, GDP would fall 4 percentage points from the baseline. The scenario includes a sovereign stress, with haircuts applied to sovereign and bank exposures in the trading book and increased provisions for these exposures in the banking book. Changes in interest rates and sovereign spreads also affect the cost of funding for banks in the stress. The stress testing methodology, which was published by the EBA on March 18th, 20112, entails a static balance-sheet assumption, and also does not allow the banks to take actions to react to shock. The resilience of the banks is assessed against a benchmark defined with reference to capital of the highest quality -- Core Tier 1 (CT1) -- set at 5% of risk weighted assets (RWA). It is interesting to see "Stress Tests" in quotes. It appears the article does not believe there was much stress to the tests and I don't either. 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.

Zepol: U.S. Imports Down 7.4% in June, Big 3 Postpone New Transpacific Service; Soft Patch or Prolonged Global Slowdown? Posted: 15 Jul 2011 09:19 AM PDT I received some interesting shipping data points from a friend in the shipping industry. Data points are from reportedly from American Shipper and Zepol. US Imports Fell 7.4% Year-Over-Year U.S. import shipment volume for June 2011 dropped 7.4% from June 2010 TEUs, decreased 4.6% from the previous month Total number of U.S. bound shipments fell over 6% from June 2010. Year to date, U.S. import volume is up 4.8 percent. June decrease largely due to a nearly 6% decrease in shipments from Asia China shipments fell 5.8% Japan shipments increased 2.5% Shipments from Central America fell 4.9% Shipments from South America fell 7.6% TEU stands for "Twenty-foot equivalent unit", a measure used for capacity in container transportation. Big 3 Container Lines Postpone New Transpacific Service The world's three biggest container lines have postponed plans to introduce a transpacific shuttle service this year until the second quarter of 2012, one of the lines said Wednesday. Maersk Line, Mediterranean Shipping Co. and CMA CGM had planned to start in May a new transpacific loop but adverse demand conditions forced the lines to postpone the start of the service three times. Service has been pushed back until 2012. Soft Patch or Prolonged Global Slowdown? The soft patch theory is slowly dying on the vine, if not completely dead. Numerous supporting data points in manufacturing, ISM, jobs, in the US, Europe, and China confirm this is more than a soft patch. Europe will be back in recession soon and the US will follow. 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.

Italian, Spanish Bond Yields Head North, Greek, Irish Bond at New Record Highs Posted: 15 Jul 2011 08:29 AM PDT It will be interesting to see how long it takes for Italian government debt yields to take out the spike high right before Trichet interfered in the Italian bond market. On the interference, yields tumbled across the board, but Greek and Italian bond yields have already made new highs. Greece 2-Year Government Bonds Ireland 10-Year Government Bonds Italy 10-Year Government Bonds Spain 10-Year Government Bonds The Bloomberg charts are inaccurate but the current yield information is accurate. On July 12, Italian yields broke above 6% before Trichet stepped in to buy Italian government debt. How long will it take before yields hit 6% again? 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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Damn Cool Pics

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• Magical Scenes Made on the Ground
• A History of the Death Penalty (Infographic)
• Husky Dog Talking - " I love you "
• 10 Most Intelligent Animals In the World

Magical Scenes Made on the Ground Posted: 15 Jul 2011 02:39 PM PDT Forget everything you ever knew about creative kids photography (except for anything by Jason Lee) and then take a look at this. Jan von Holleben, the talented photographer who made a name for himself with Dreams of Flying just sent us over these wonderfully inspiring images. Action Heroes picks up where Dreams of Flying left off...only it's bigger and better. The Wizards The Karate Kids The Rockstars The Indiana Jane The Lovers The Aliens The Pirates The Star Warriors Source: mymodernmet

A History of the Death Penalty (Infographic) Posted: 15 Jul 2011 02:34 PM PDT The death penalty is an extremely controversial issue. Though the supreme court abolished the death penalty in 1972, it was later reinstated in 1976 and continues to this day, most prominently in Texas. Find out more about death penalty and related issues in the infographic below. Click the infographic to enlarge it. Source: criminaljusticedegreesguide

Husky Dog Talking - " I love you " Posted: 14 Jul 2011 08:05 PM PDT Mishka makes it clear just how much she loves us!

10 Most Intelligent Animals In the World Posted: 14 Jul 2011 05:13 PM PDT Here's a list of most intelligent animals in the world. The animal listed here is sorted by the level of intelligence. This list can't be used as a scientific reference as this is just for your information. So If You have other more intelligence animals that should be listed here, please just comment on this post. So Let's take a look at top 10 most intelligent animals in the world. 1. Chimpanzee This animal can be found in wet tropical forests and savannas of West and Central Africa. Chimpanzee are able to learn, perform the tasks of thinking organization, and has a better memory then any other animal. They have been known to beat the college educated in the memory test. They can be taught to use computers to solve numerical problems. These animals can quickly adapt and perform sign language to communicate with humans. Chimpanzees have been observed using advanced knowledge tools. This includes a spear to take animals out of small holes in trees, using branches to lure and catch prey, using stones to break nuts, and leaves a sponge to absorb water. They have seen an attack using tactical maneuvers, such as flanking prey. They often use mental manipulation within their families. Chimpanzee Genome Project is completed in 2005. This shows that chimpanzees share 98% genetically the same DNA as humans. It was approximately four to six million years since humans and chimpanzees that deviate from the evolution of their common ancestor. More recently, chimpanzees have been seen teaching sign language to their babies without human intervention. We were just beginning to understand the mental abilities of chimpanzees. 2. Bottlenose Dolphin Bottlenose Dolphin lives in the warm waters worldwide and is the most intelligent species of dolphins. It has a very large brain and the cerebral cortex and the frontal lobe is 40% larger than humans. Cerebral cortex is a part of the brain responsible for social communications, abstract information processing, problem solving, and intelligence of a higher level. Dolphin bottle very easily trained. They have been found to have the ability to think, plan, solve problems, think abstractly, comprehend ideas, and learn from previous experiences. They use echolocation to hunt prey, and certain forms of squeaks and whistles to communicate with one another. It is also interesting to see that in many occasions this dolphin show remorse for the other species and the signs of consciousness. In a story recently, the local dolphin named Moko saved two Pygmy sperm whales stranded on New Zealand. Whales had been stranded for hours when Moko appeared and led the pair through the bars of sand for safety. It is a beautiful sight for locals and become national news. 3. Rhesus Monkey Rhesus monkeys are known for intelligence and it has been widely used in biological and medical research. It has great memory, the ability to learn, and make decisions for themselves. They use facial expressions very similar to human and understood by humans. Rhesus Monkey's have demonstrated suicidal tendencies, planning attacks, and highly complex social animals. They have a detailed system of shared vocal similarities to human communication. Research on the genome sequencing of the Rhesus Monkey in 2007, conclude that humans and apes share 93% of their genetic DNA. Humans and apes chromosome mosaic each other. 4. Elephant There are three living species of elephants, African Bush Elephant, African forest elephant and Asian elephant. All the offspring is expected to inherit the same genetic genius. In many cultures the elephant is seen as a symbol of wisdom and known for their extraordinary memories. They create a mental map and is said to remember the exact location of water holes that feeding them after not visited for years. Elephant brain is the largest of all land animals. Elephants have exceptional hearing and they use their ears and trunk to listen. They communicate with the bellows, roars, like a trumpet call, and can even send voice remotely using the land. This animal is one of the few species that has shown mirror self-recognition and identify themselves as independent. This test is considered as the higher basis for empathy, altruism, and social interaction in some other species. Elephants have noted a variety of behaviors. Including actions associated with grief, making music, love, play, and the use of sophisticated equipment. Elephants have extraordinary taste for artistic achievement. They can paint a portrait that expresses itself. 5. African Grey Parrot African gray parrot is a species found in West and Central African rain forest. Parrots is famous to show that they can imitate human speech, but the African Gray can associate words with meaning and form small sentences. This bird communicate with each other through songs, calls, and body language. African Gray's can easily be trained to have conversations and activities. They can be managed to imitate, create voices and imitate sound of household perfectly. One specific example is Alex birds. Alex can identify more than fifty objects, seven colors, five shapes, and a numeric value to six. Alex understands the difference between large and small, above and below, and even show emotion understanding by telling handlers "to go away" when he became bored with the test. Then there is the story of the African Gray Parrot in Nagarey, Japan lost from the owner, wounded, and sent to the animal hospital. While in hospital the bird began to speak with the vet says "I'm Mr. Yosuke Nakamura." He also provides a complete home address to the last number. Pretty sure he was right and returned to the house, but not before entertaining the hospital with a song and dance. 6.. North Pacific Giant Octopus This animal live in the depth of the sea. They belong to cephalopods molluscs class. All types of cephalopods are known to have exceptional intellectual ability. Octopus is considered the most intelligent invertebrate life. In the experimental conditions, these animals have shown short and long term memory. They have an extraordinary observation learning and problem solving skills. Octopus nervous system has a very large, but only partially found in their brains. In about two-thirds of octopus, neurons can be found on the rope around and the arm. There are arm that has a very large autonomy. They are masters of mimicry and camouflage. They are professional escape artist and can often be found in the hull crabs, eat the catch. This animal is very keen eyesight, sense of touch, and very fast. There was a report from the North Pacific Giant Octopus that reach 600 pounds, with a range of hands 30 feet. 7. Border Collie Border Collie is widely regarded as the most intelligent dog breed in the world. They usually spend their time tending sheep and cattle handling various forms, but It's also a great pet. With physical exercise and various forms of mental stimulation this dog is the fastest to learn. The dog is originated in Scotland, Welsh, and English border and the dogs make a direct impact on the agricultural industry. It has been reported that in certain areas Australian Outback, a trained collie can do five times the amount of work that usually done by human. Border Collie dominate over all breeds in dog sports. They excel in the high jump, utility classes, flying-ball, and even can take first place in dog dancing competitions. They have an extraordinary sense of smell and is widely regarded as the great dog. They can be trained as helper dogs, or in search and rescue as well. This dog obviously will recognize you as an individual personality, they will learn your routine, anticipate what will happen next, and find a way to get what they want. 8. Ravens & Crows These two animals is mentioned together because both are members of the family Corvidae birds. This family is widely regarded as the most intelligent of all birds. Peak crow IQ scale, which is a scientific test to determine the intelligence of birds. They can count, distinguish complex shapes, and perform observational study tasks. Crows are social creatures and will be involved in the air to form a jousting sequence power. Wild hooded crows in Israel have learned to use bread crumbs as bait fish, think in advance and anticipate the catch. The New Caledonian Crow have been studied for its ability to use tools in looking for food everyday . This includes creating a knife that cut the leaves and stems of grass. They are also using advanced picking, smoothing, and bending of twigs and grass stems to produce a variety of food substances. Raven is similar to the crow, but larger size. Both species are black and the main difference is in their vocalizations. Ravens do a lot of the same behavior as crows, but they have been recognized for their ability to drop the beans, clams, muscles, and oysters on the highway, waiting for cars to run them over. 9. Rats There are hundreds of species of rats in the whole world. Rat is one of the most studied and tested the animals on this planet. They have been the subject of research and experiments for various well-known and influential physiological studies. The reason for this is that mice is similar to the psychology of human. All rats learned new behaviors and tricks easily. A 2007 study found that mice have metacognition, which is a mental ability previously only been documented in humans and some primates. Mice have a remarkable sense of smell and hearing. They have been trained to detect landmines and bombs. Research and latest technology has been suggested that mice could even smell and identify human sputum samples infected with TB. This is a wonderful animal to solve the maze. Rats are social animals and show signs of remorse, joy, loss, and stress. They dream in a very similar way as humans. They also demonstrate exceptional organizational and technical maintenance. Just remember, mice are intelligent and friendly creatures so don't afraid of them. 10. Portia Labiata Jumping Spider This species is a member of the genus Portia, kind of spiders and smallest creatures in the list. Also known as the White-whiskered Portia, they inhabit the critical areas and secondary forests in Africa, Asia, and Australia. This spider has shown the ability to learn in laboratory tests and the bug has been labeled the smartest in the world. They perform surprisingly well in various tasks of solving problems. One of the principles of their other charming skills of spider webs to their food. To do this they will pull the rhythm in the corner of the web to mimic the trapped bug or insect intruders. If Portia had been found of this spider before, it will remember what the rhythm pattern used to achieve success. Portia labiata had large eyes and have been seen using extraordinary instinctive behavior. The spider who planned to use trial and error approach to hunting and cognitive showed a strong base. When the prey comes and goes, the spider will sit and wait for hours to have a perfect moment to strike. Next, plan ahead and understanding that will eventually eat again. This spider has also shown signs of selective attention by identifying a particular object and prey on others. Source: 1000funfacts

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