Mish's Global Economic Trend Analysis

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• France Vows to "Save the Bookstores", Fixes Price of Books, Bans Free Shipping by Amazon
• Spain Suffers from Hundreds of Earthquakes Caused by Offshore Drilling; Largest Quake is Magnitude 4.2; Citizens Complain of Cracks and Tremors Whipping Their Homes
• Boehner Prepared to Cave-In to Obama; Reflections on the Waiting Game

France Vows to "Save the Bookstores", Fixes Price of Books, Bans Free Shipping by Amazon Posted: 03 Oct 2013 09:12 PM PDT In yet another act of economic stupidity, France targets Amazon to protect bookshops. France's parliament has passed a law preventing internet booksellers from offering free delivery to customers, in an attempt to protect the country's struggling bookshops from the growing dominance of US online retailer Amazon. On Thursday, Aurélie Filippetti, the culture minister who originally proposed the move, denounced Amazon for its alleged "strategy of dumping", claiming that the company used offers of free delivery to get around French laws controlling the price of books. The socialist government of President François Hollande is lobbying the EU to regulate online platforms and applications and is pushing for international agreement on taxing internet companies such as Google, Facebook and Amazon in the countries where customers use their websites. Defending France's cultural assets against the perceived threat from US products and companies has strong cross-party support. All main parties supported the new law, which will be added to 1981 legislation that allows a maximum 5 per cent discount on the centrally-fixed single price for books. What is with these economic morons? Not only do they fix the price of books, they fix the price of shipping them. Worse yet, France is pushing for an international tax on Google, Facebook and Amazon in the countries where customers use their websites. Good grief. No one benefits from such stupidity except a handful of inefficient bookstore owners. Everyone else loses.  These fools are likely to tax the sun for providing free sunlight. Actually, I am surprised Spain beat France to that idea. For details, please see Spain Levies Consumption Tax on Sunlight. Had these fools been in charge, they would have protected the buggy whip manufacturers against unfair competition by Henry Ford and the auto industry. 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.

Spain Suffers from Hundreds of Earthquakes Caused by Offshore Drilling; Largest Quake is Magnitude 4.2; Citizens Complain of Cracks and Tremors Whipping Their Homes Posted: 03 Oct 2013 01:25 PM PDT An investigation is underway in Spain as to the cause of hundreds of recent earthquakes in the Cataluña region in Spain. The energy minister says "It appears that there is a relationship between gas injection and earthquakes". Via Mish-modified translation ... Jose Manuel Soria, the Minister of Industry, Energy and Tourism said that it appears that there is a direct relationship between the injection of gas into the underground Castor warehouse and earthquakes. The minister's remarks come after another night of earthquakes on underground warehouse environment. According to the National Geographic Institute, last night during 23 earthquakes have occurred. Two of them, at one in the morning and half an hour later, recorded a magnitude of 4.1 on the Richter scale. The other earthquakes were registered a magnitude of between 1.7 and 2.9 on the Richter scale, according to the sources. The most intense ground motion since records began these earthquakes related to the Castor project came in early Tuesday with a magnitude of 4.2. The Castor project, with an investment of 1,200 million euros, aims to harness an old oil well 1,750 meters below sea level to supply up to a third of the gas demand of the system for 50 days, but apparently, gas injection since September 13 has caused hundreds of earthquakes, most low intensity. Several experts geologists have claimed that many earthquakes are due to "induced seismicity" by the Castor project, caused by the injection of gas into the rock. However, there is no consensus about its risks and evolution. Citizens Complain of Cracks and Tremors Whipping Their Homes Via "as is" Google-translation, please consider "I spent half the night" The residents of the villages near the Castor underground gas storage, near which has registered a surge of earthquakes, tremors live with that uncertainty every night whipping their homes. "was sleeping and moved the closet door that I have just back, I got scared and woke up suddenly, it was very strange, I had never felt anything like it, "says Ricard Fuster, neighbor Alcanar (Tarragona) on the earthquake registered 4.1 degrees last night in the Gulf of Valencia. In the same terms is expressed Pietat Subirats, 47, sleeplessness trailing by earthquakes: "I've spent half the night. I woke with a start, in my house have noticed the two strongest earthquakes and trembled on my street all, "says this 47-year resident of Alcanar. "First I felt the movement of the bed, then started to shake and furniture throughout the house, the dogs would not stop barking area," he recalls. Pietat is outraged: "In my street were all awake by contacting us through social networks. We are angry because these episodes are becoming worrisome, asking politicians and responsibilities to the company. The inhabitants of the towns of the Ebro and Castellon collect sleeplessness and tremors stories. Earthquakes, in fact, dominate all neighborhood gatherings: "We are afraid, I have noticed the strongest earthquake that has been, then moved the structure of the house," says Emilio Valls, a real estate agent for 36 years who lives in a three-story building in Sant Martí Mayor Street, in the heart of Alcanar, a few meters from the Plaza Mayor. Blame Game is On Here is a rather curious "as is" Google-Translated headline: "The government did not heed the request of the Government to make a seismic report" Close scrutiny reveals that current government officials blame the previous administration (always a safe thing for politicians to do). The previous government was warned about the need to analyze the seismic consequences of project implementation Castor, gas marine store located at the Ebro Delta told him the Government before the license granted to initiate activities to Scales UGS, but the Ministry of Industry disregarded regional requests, as explained this morning the Minister for Territory, Santi Vila, who has confirmed this morning there was another earthquake of 4.2 on the Richter scale. Meanwhile, the president of the council of Castellón, Javier Molinero, has announced that the provincial corporation take legal action "against former ministers responsible for the processing and adjudication of granting Castor underground storage project in the event that there is evidence of negligence in the process carried out by the Government of Spain between 2008 and 2010. " Miller has aimed at Narbonne Cristina, Elena Espinosa, Miguel Sebastian and Joan Clos for their different responsibilities in the project. The Catalan Minister Santi Vila has held that "the issue is not to laugh, it's serious" after continuous earthquakes that have occurred in the last week, warning that from a intesidad of 4.5 may have direct effects in buildings, with the appearance of cracks. Hence, the Government has contacted the project manager, Escal UGS, to have the certainty that the activity has been stopped. 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.

Boehner Prepared to Cave-In to Obama; Reflections on the Waiting Game Posted: 03 Oct 2013 11:11 AM PDT Those who thought House leader John Boehner would do something different this time (not cave-in to Obama) thought wrongly. The New York Times has the details in  Boehner Tells Republicans He Won't Let the Nation Default With a budget deal still elusive and a deadline approaching on raising the debt ceiling, Speaker John A. Boehner has told colleagues that he is determined to prevent a federal default and is willing to pass a measure through a combination of Republican and Democratic votes, according to one House Republican. The lawmaker, who spoke on the condition of anonymity, said Mr. Boehner had indicated he would be willing to violate the so-called Hastert Rule if necessary to pass a debt-limit increase. The informal rule refers to a policy of not bringing to the floor any measure that does not have a majority of Republican votes. Representative Michael G. Fitzpatrick, Republican of Pennsylvania, who was one of just 22 House Republicans this year who helped Mr. Boehner pass three crucial bills — to avert a fiscal showdown, to provide relief for the victims of Hurricane Sandy, and to pass the Violence Against Women Act — with a majority of Democratic support, said he expected that he may be asked to do so again. "Hurricane Sandy, the fiscal cliff, all of the big votes require reasonable Republicans and Democrats to come together in order to pass it and get it to the president's desk," he said. "This will be no different." And, Mr. Fitzpatrick added, "I've been there in the past, and I'm prepared to be there again." Representative Leonard Lance of New Jersey, one of the moderate Republicans who met privately with Mr. Boehner on Wednesday, would not provide details of the meeting, but said, "The speaker of the House does not want to default on the debt on the United States, and I believe he believes in Congress as an institution, and I certainly believe he is working for the best interests of the American people." Waiting Game All that's left now is a waiting game. Given that Boehner is going to cave-in and pass some sort of measure Obama and the Democrats can sign off on, the pseudo-drama is gone. Perhaps the House puts together another measure that a few Democrats will go along with, but if the Senate and president Obama do not like the measure, it will go nowhere. The Senate would amend any bill the president does not like, pass it back, and Boehner would put it up for a vote. Then, a handful of Republicans will sign it, and that will be that. The best Republicans can hope for is some minor changes to Obamacare (that Democrats are in favor of as well).  I suspect some talk between Boehner and Obama along these lines are in progress right now. Both parties will declare victory but Republicans will have lost. Meanwhile, the Hype Continues From the Times .... A Treasury Department report released on Thursday said the debt-limit impasse could cause credit markets to freeze, the dollar to plummet and interest rates to rise precipitously. A default might prove catastrophic, the report said, and could potentially result "in a financial crisis and recession that could echo the events of 2008 or worse." The administration has made increasingly strong public warnings about the potential economic consequences of not increasing the debt limit. "As reckless as a government shutdown is, as many people as are being hurt by a government shutdown, an economic shutdown that results from default would be dramatically worse," Mr. Obama said on Thursday, speaking to construction workers at M. Luis Construction in Rockville, Md., a suburb north of Washington. He said that a default would be "the height of irresponsibility," adding that "there will be no negotiations over this." "The United States is the center of the world economy," Mr. Obama said, "so if we screw up, everybody gets screwed up — the whole world will have problems." Many market participants interpret the White House's public statements as an effort to get Wall Street to pay attention, even to provoke a market reaction that might spur Congress to act. Reflections on the Waiting Game  Why should the market react to any of this, since everyone knows Boehner will cave-in, including Boehner himself? Moreover, one has to wonder about the nature of hyped-up statements from the WhiteHouse in the first place, if the only intent is to create a wanted  reaction in the stock market. Such is the preposterous positioning on both sides of the aisle. 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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