Mish's Global Economic Trend Analysis

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Italy Stalemate Broken, Napolitano, 87, Elected for Another 7-Year Term Posted: 20 Apr 2013 06:45 PM PDT In a move that cannot possibly solve anything Italian Lawmakers, Re-elect President to Second Term. In a bid to quiet growing political chaos, Italian lawmakers on Saturday elected President Giorgio Napolitano to a second term, turning to him as the last best hope to break a profound deadlock. The election of Mr. Napolitano, supported by both the main center-left and center-right parties, suggested that the two sides would now be more willing to negotiate the formation of a government. But it also infuriated the anti-establishment Five Star Movement of Beppe Grillo, which won a quarter of the recent parliamentary vote. While he cannot prevent a grand coalition, one including both major parties, from forming, Mr. Grillo could complicate matters by stirring renewed anger against the old political establishment, which is in upheaval. After Mr. Grillo called on his supporters to take to the streets, hundreds of protesters gathered in front of the Parliament building, many holding placards in support of Five Star's candidate, Stefano Rodotà , a legal expert and former leader of the center-left, which nonetheless did not back him. Mr.dà is "not part of the old guard," said one protester, Anna Maria Vatrella, an unemployed social worker. "All the left knows how to do is to hold on to the power they have. They have no interest in change. They have no idea what it means to live as normal people do." Pier Luigi Bersani Announces Resignation In case you missed it late Friday Italy centre-left leader Pier Luigi Bersani announced resignation Mr Bersani's move came after backers in his party voted down two candidates that he had proposed for the role of president. Late on Friday night, he accused fellow party members of betraying him, adding that there was a "tendency in some towards permanent destruction." The centre-left's implosion is the latest reminder of how it is made up of a string of parties, from former communists to Christian democrats who have never gelled, failing to hold a government together when elected in 2006 and never mounting a truly convincing opposition to Silvio Berlusconi. While the centre-left has stumbled since the election, former prime minister Silvio Berlusconi's centre-right coalition has taken a lead in the polls. Mr Bersani's exit could allow his photogenic young rival in the Democratic Party, Matteo Renzi - who also appeals to right wing voters -- to take charge. Yesterday, Giorgio Napolitano, the 87-year-old incumbent president, agreed to accept a mandate for a second term as a president in order to end the impasse over who should do the job. He had previously sought to avoid standing again because of his advanced age. As I said, Bersani's days were numbered. Little did I know they would be this numbered. Now what? Napolitano could not form a grand coalition before so why can he do so now? The only thing that has changed is Bersani is gone and the supporters of Grillo are madder than ever. Given that both Berlusconi and Grillo have a chance at winning the next election outright, both have a reason to want new elections. Berlusconi has another objective, however, and that is coming up with any deal that avoids prosecution. With that in mind, an unstable "grand coalition" of sorts may be temporarily possibile. If so, expect the coalition to dissolve as soon as Berlusconi gets the immunity he seeks. 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.

Understanding German Politics Posted: 20 Apr 2013 10:04 AM PDT Inquiring minds in the US note the upcoming German election and may be wondering about the platforms of the major political parties. Reader Bernd from Germany explains. Die Linke (The Left): Die Linke is made up of the former SED/PDS (The East German Communist Ruling Party), some former West German Communist and Socialist Parties and a "rebel group" of the SPD. They all have merged and are now called "Die Linke". By and large they have a communist/socialist platform, albeit not Stalinist. Their main requests are: dissolve NATO and replace it with a new organization to include Russia in it, end all wars, control or nationalize all relevant banks and some crucial industries, increase support for the poor, raise taxes for the rich (above income of 60k Euros gradually go to 75%), introduce a stiff wealth and inheritance  tax. They are pro Euro and want the introduction of Eurobonds immediately. To alleviate the economic crisis in Europe they advocate some serious deficit spending for social and work programs. They have voted against ESM; EFSF and Cyprus deal in Parliament. SPD (Social Democrats): SPD is the grand old Social Democratic Party, with a wonderful and long tradition. SPD originated from the worker's movement. Its first party program is from 1869. It the only party that tried to stop Hitler's power grab by opposing the emergency laws in 1933. Many went to concentration camps for opposing Hitler. In post-World War II Germany SPD provided three Chancellors, Willy Brandt, Helmut Schmidt and Gerhard Schröder. All three Chancellors were major reformers in Germany for one or the other topic.  SPD lost its original power base in the wake of Schröder's reforms in the early 2000s. SPD is a staunch pro Euro party. They also want Eurobonds immediately, as well as a common fiscal policy, a bank union and a quick unification of Europe. Die Grünen (The Green Party): Die Grünen started as a mix of 1968 communists/socialists and anti-nuclear energy activists in West Germany. The second part is made up of some left over former East German anti SED "rebels" who helped to bring down East Germany.  Today this is the party for so the so-called "politically correct". In Germany we call them the Latte Macchiato Moms/Dads. The typical party member is a well-paid Government official or teacher with a work week of 36 hours. They believe firmly in manmade climate change and want to tax and spend their way to eliminate the CO-2 footprint. No amount of money is too much for preventing climate change. They are staunch pro Euro advocates similar to the SPD. Freie Demokratische Partei FDP (Free Democratic Party): originated from a mix of former liberal parties during the Weimar Republic with an originally clear idea on liberalism. The FDP once strongly supported human rights, civil liberties, and international openness, but has shifted from the center to the center-right over time. Today's main goal is to get at least 5% of the popular vote, otherwise they will have no representation in parliament. They are a coalition partner to Merkel's CDU party but most of them would be hard pressed to state why. FDP may not pass the 5% threshold in the next election. FDP states that they wish Europe to return to the "No-Bail out Clause" and the Maastricht Agreement, however, in Parliament they voted for a massive breach of both agreements, following Merkel's position. CDU (Christian Democratic Union): CDU is a center-right, typically Catholic, typically pragmatic popular party. It is the party of most Chancellors now including Angela Merkel. I call it the "yes Chancellor Club". Merkel calls herself pragmatic, some German people call her "Mutti". Mutti in German means a cunning, but one minded pragmatist, who will reprimand/control her husband for coming home late from a bar. CDU is pro-euro but against Eurobonds. Under Merkel CDU has lost its profile and has made some erratic shifts in position, which is a major turnoff for many supporters. Notably Merkel's agreement to the breach of all EU-Agreements and her shift to a so called "green energy" has alienated many voters. CSU (Christian Social Union): CSU is the Bavarian sister to the CDU. Whereas CDU operates in 15 States, CSU is in Bavaria only, where it traditionally gets 50 plus percent of popular votes, thus catapulting it above 5% on federal level. Voter participation in Bavaria is traditionally above 75%. CSU follows Merkel, but tensions are rising. Many CSU members are far from convinced that Merkel is right. Most of legal obstacles against Merkel's Euro policies in front of the Federal Constitution Court come from members of the CSU. Due to its high degree of organization and its firm foundation in the center of Bavarian populace, CSU is rather influential in German Federal Politics. Alternative für Deutschland) AfD (Alternative for Germany): AfD is a liberal-conservative party supported by many German economists. More than two-thirds of its initial supporters hold doctorates. Its main position is a return of the EU to the original meaning of the Maastricht agreement, alternatively a return to national currencies. The second major topic is the strengthening of German Democracy, advocating a Swiss – like model. In April 2013, the party held its first convention in Berlin, which was attended by about 1500 supporters. The convention elected the party leadership and adopted the party platform. The three elected speakers are economist Bernd Lucke, the entrepreneur Frauke Petry, and the publicist Konrad Adam. The key demand of AfD is to provide a mechanism for countries to exit the Eurozone. In old Germany, "liberal" was in regards to Civil Rights, not free-flowing money or other policies those in the US may associate with the word. Liberal for AfD is a bit different than for the current FDP Mish Note: Reader Bernd is not (not Bernd Lucke, the economist and AfD elected speaker). I will have election predictions next week from Reader Bernd. 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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