Mish's Global Economic Trend Analysis

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• France Budget Forecast "Wildly Inaccurate" Leaving €14 Billion Black Hole; Sharp Rise in French Unemployment
• Google Unveils Self-Driving Car, No Steering Wheel, No Accelerator, No Brake Pedal; Self-Driving Taxi Has Arrived
• Employers Struggle to Find Qualified Graduates: Poorly Written Resumes to Blame?

France Budget Forecast "Wildly Inaccurate" Leaving €14 Billion Black Hole; Sharp Rise in French Unemployment Posted: 28 May 2014 10:45 PM PDT French President Francois Hollande hiked income taxes, VAT and corporation tax following his election two years ago. Hollande estimated those tax hikes would raise €30 Billion in revenue. The BBC reports France Faces €14 Billion Budget Hole. The French government faces a 14bn-euro black hole in its public finances after overestimating tax income for the last financial year. French President Francois Hollande has raised income tax, VAT and corporation tax since he was elected two years ago. The Court of Auditors said receipts from all three taxes amounted to an extra 16bn euros in 2013. That was a little more than half the government's forecast of 30bn euros of extra tax income. The Court of Auditors, which oversees the government's accounts, said the Elysee Palace's forecasts of tax revenue in 2013 were so wildly inaccurate that they cast doubt on its forecasts for this year. It added the forecasts were overly optimistic and based on inaccurate projections. Surprise, Surprise, Not Surprise, Surprise, Not (at least in this corner). Nor was there any surprise in this corner regarding French Unemployment. Sharp Rise in French Unemployment Via translation from Les Echos please note a Sharp Rise in French Unemployment The number of Class A job seekers reached 3,626,500 in April. At this rate, the threshold of half a million more unemployed since the election of François Hollande will be reached this summer. The March respite in unemployment was short-lived. According to official statistics released Wednesday, the number of unemployed has regained most of the beautiful growth last month. The balance was more negative in April when we also take into account the number of unemployed who worked in the month. No age group was spared in April, but older were the most affected. Unemployment has increased among youth by 0.2%, by 0.4% in age group 25-49 years, and by 0.7% among those older. The number of long-term unemployed also continued to rise. Ministry of Labor Disses Pessimism Rue de Grenelle at the Ministry of Labour, said in a statement "We refuse to sink into pessimism. These figures reflect the situation observed in early 2014 year and they should be interpreted with caution because of the high volatility of monthly data, not the trend in the second quarter." Another month or two will likely prove that optimism seriously misplaced. 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.

Google Unveils Self-Driving Car, No Steering Wheel, No Accelerator, No Brake Pedal; Self-Driving Taxi Has Arrived Posted: 28 May 2014 12:22 PM PDT In yet another step towards self-driving vehicles, Google Unveils Steering Wheel-Less Car Prototype. Ever since we started the Google self-driving car project, we've been working toward the goal of vehicles that can shoulder the entire burden of driving. Just imagine: You can take a trip downtown at lunchtime without a 20-minute buffer to find parking. Seniors can keep their freedom even if they can't keep their car keys. And drunk and distracted driving? History. We're now exploring what fully self-driving vehicles would look like by building some prototypes; they'll be designed to operate safely and autonomously without requiring human intervention. They won't have a steering wheel, accelerator pedal, or brake pedal… because they don't need them. Our software and sensors do all the work. We started with the most important thing: safety. They have sensors that remove blind spots, and they can detect objects out to a distance of more than two football fields in all directions, which is especially helpful on busy streets with lots of intersections. And we've capped the speed of these first vehicles at 25 mph. On the inside, we've designed for learning, not luxury, so we're light on creature comforts, but we'll have two seats (with seatbelts), a space for passengers' belongings, buttons to start and stop, and a screen that shows the route—and that's about it. First Drive Not a Car, It's The Future David Pierce on The Verge writes Google's Self-Driving Car Isn't a Car, It's the Future On Tuesday night, onstage at the Code Conference in California, Brin revealed an entirely new take on a self-driving car, one decidedly more ambitious than anything we've seen before. Nothing about this car is traditional: it has a front made of compressible foam, a flexible plastic windshield, and a dual-motor system that keeps the car running even if part of its engine fails. It's easy to imagine executives at GM balking at quite literally reinventing the wheel to help Google X with its latest moonshot. Self-driving cars are coming. That's essentially a given: the technology already mostly works, and nearly all automakers believe autonomous vehicles are both a good and feasible idea. They disagree only on the timing, though "by 2020" has become an increasingly popular refrain. The biggest remaining challenges appear to be regulatory rather than technological, as governments start to answer questions like who's responsible when a self-driving car gets in an accident. In classic Google fashion, though, Brin talked less about what the Google car could mean for Google and more about how it might change the world. What if we all sold our cars? What if every time we needed a car, we unlocked our smartphones and called for one with a single tap, and as soon as it dropped us off it went off to its next job? We'd need fewer parking lots, reduce our emissions, stop driving drunk, and get in fewer accidents. Those who couldn't or shouldn't drive – the blind, the elderly — could still get around. This is the future Brin imagines, one with huge ramifications on everything from the environment to the economy. And the cute little car he's been developing at Google X is the closest thing we've ever seen to making that idea real. Eventually it's going to work, though, even if by the time autonomous vehicles hit the mainstream they'll more likely have a Ford or Nissan logo than a Google Doodle. Google doesn't have the scale, the infrastructure, or likely the desire to enter the car market in a real way. Google's car will force lawmakers to finally figure out what happens when cars stop helping us drive and starts truly driving us. It will force automakers to think two steps further down the self-driven road than they had before. It will force customers to get used to the idea of not owning a car, and the notion that it's actually more convenient doing things the Uber and Zipcar way. It'll teach us to think of cars as public transportation, a service provided for us. Even if we're years away from the wide availability of the technology it's now clearer than ever that's what a "self-driving car" really means. Toyota On Wrong Track Last year Toyota made a big splash with wheel-less vehicles, however,Toyota is totally on the wrong track. The steering wheel-less Toyota prototype detects the driver's movements, leaning this way or that to control turns. Applications of that nature are fine for artificial limbs, but that is precisely what one would not want from a drunk or tired driver. What's It All About? Google is not interested in manufacturing cars. It is interested in software licenses and patents on tens-of-millions of driver-less vehicles worldwide. Wave of the Future - Self-Driving Taxis The wave of the future is self-driving taxis, which is really what a steering wheel-less car is. The concept will end the debate over taxi licenses, and taxi vs. limo pickup restrictions and other such nonsense, once and for all. But driver-less cars will not happen overnight. Perhaps not even by 2020. Yet, within a decade, there will be monstrous changes in the ways we currently think about transportation. What About Drones? Driver-less cars can now get licenses (see Driverless Cars Legally Hit Roads as California Issues Licenses; The Last Mile). So why not licenses for drones? That is coming too. For discussion of an Amazon pizza delivery drone prototype, please see How Will Pizzas Be Delivered? Do You Tip a Drone? Eventually it will not take a car of any kind to deliver your pizza, but rather a mini-drone that will deliver your pizza faster, fresher, and hotter than any road vehicle can. Looking ahead, if drones can deliver pizza, why not stuff much larger? Well, that will take more time, but not that much more time. Once drones are licensed, the sky is the limit. Implications Millions of people have jobs that will vanish and skills that are totally useless. Technology makes things better and improves standards of living. As such, technological improvements are hugely price-deflationary. And contrary to what many think, there is no downside. Would we be better off with horses than cars? Better off with no cell phones or artificial limbs? The downside is not vanishing jobs, per se. Rather, the downside is a Fed hell-bent on creating inflation in an inherently deflationary world. 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.

Employers Struggle to Find Qualified Graduates: Poorly Written Resumes to Blame? Posted: 28 May 2014 09:32 AM PDT Graduates looking for jobs struggle to find them. Employers cannot find qualified graduates. Are poor resumes to blame? An article in The Independent suggests that is part of the problem. Please consider Graduate Employers Struggling to Fill Vacancies. The class of 2014 who graduate from university this summer still have a choice of hundreds of jobs that they could snap up, says a poll out today. Nine out of 10 companies surveyed by the Association of Graduate Recruiters are struggling to fill all their vacancies, it concludes. The reasons are twofold, according to the AGR – more vacancies being on offer after years of austerity and too many applications of insufficient quality. The AGR surveyed 68 top companies – with 87 per cent reporting unfilled vacancies. These covered a range of occupations – IT, electrical and electronic engineering and general managements jobs. In all, 55 per cent of the companies said they had increased the number of jobs on offer this year – but two thirds (67 per cent) said applications were of insufficient quality. Mr Isherwood added: "sometimes they have not paid drafting the application the attention it deserves. It's like a spray-and-pray approach and then bang the application out. "As an employer if you've got someone who has put a lot of thought into their application, then that clear the first hurdle." Assume for a second, every application was perfectly written. There would still be too many people seeking jobs, than jobs exist. Other than a possible internship, most of these graduates have no real world experience. Moreover, some of those with internships did not do meaningful work. What's left is those who get hired. The problem is lack of relevant experience vs. expectations, and there is no way to hide that problem, no matter how creative the application. At the margin, someone who writes a better application has a better chance than someone who doesn't, but that will not increase the number of jobs available or the skills required for those jobs. 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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