Central Perk

vineri, 28 septembrie 2012

Mish's Global Economic Trend Analysis

Japan PMI: Output and New Orders Contract Further
France Piles €20 Billion in Tax Hikes on Businesses and Wealthy
Can the Fed Fight Droids and Win? Apple's SIRI, Driverless Trucks, What's Next? Riveting Video: Are Droids Taking Our Jobs?

Japan PMI: Output and New Orders Contract Further

Posted: 28 Sep 2012 01:55 PM PDT

The global economy continues to weaken most everywhere you look. The focus of this post is Japan where the Markit/JMMA Japan Manufacturing PMI™ shows Modest deterioration in operating conditions recorded in September.

Key points:

Output and new orders both down again, albeit at slower rates
Weaker underlying demand and strong yen impact on export orders
Charges cut at sharpest rate for over two years

Summary:

Operating conditions in Japan's manufacturing sector continued to worsen at a modest pace in September. Output and new orders both fell amid reports of a general stagnation of economic activity in domestic and overseas markets. Manufacturers continued to deplete inventories, while they made further sharp inroads into their work outstanding. Payroll numbers were little changed.

On the price front, companies responded to the weaker demand environment by discounting their charges to a greater degree. These efforts were aided in part by a further modest reduction in input prices.

After adjusting for seasonal factors, the headline Markit/JMMA Purchasing Managers' Index™ (PMI™) improved to a three-month high of 48.0 in September (August: 47.7) but, by remaining below the 50.0 no-change mark, again signalled a modest deterioration in operating conditions.

Production and new order volumes continued to decline on a monthly basis. Although slightly weaker than in August, rates of contraction remained marked, particularly in the investment goods sector.

Looking ahead, the widening rift between Japan and China over disputed islands certainly cannot help yet Voice of America reports there is No Sign of Progress in Dispute.

September 26, 2012
A bitter territorial dispute between China and Japan showed no signs of improvement Tuesday, as foreign ministers from both countries held high-level talks to ease tensions.

Relations have sunk to their lowest point in years, with anti-Japan protests breaking out across China and many Chinese refusing to buy Japanese-made goods. On Wednesday, Japanese automakers Toyota and Nissan said they are reducing production in China because of lessened demand.

[Foreign Minister Yang Jiechi] warned that bilateral relations could not "return to the track of sound and steady development" unless Japanese officials "take concrete measures to correct its mistakes."

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

France Piles €20 Billion in Tax Hikes on Businesses and Wealthy

Posted: 28 Sep 2012 10:15 AM PDT

It's now official. The top tax rate in France is now 75% for those who make over a million euros. Moreover, there is a new band of 45% for those who make over 150,000 euros. Don't forget the existing VAT on all purchases.

Europe is imploding and instead of fixing onerous work rules, France Hits Rich and Business to Slash Deficit.

Socialist President Francois Hollande unveiled higher levies on business and a 75-percent tax for the super-rich on Friday in a 2013 budget aimed at showing France has the fiscal rigor to remain at the core of the euro zone.

Of the total 30 billion euros of savings, around 20 billion will come from tax increases on households and companies, with tax rises already approved this year to contribute some 4 billion euros to revenues in 2013. The freeze on spending will contribute around 10 billion euros.

To the dismay of business leaders who fear an exodus of top talent, the government confirmed a temporary 75 percent super-tax rate for earnings over one million euros and a new 45 percent band for revenues over 150,000 euros.

Tough New Measures or Idiotic Measures?

The Financial Times reports France unveils tough budget measures

The measures announced on Friday included the controversial 75 per cent marginal tax rate on earned income above €1m a year, put in place for two years.

But, as promised by President François Hollande, France was largely spared the kinds of hefty cuts in public spending, pensions and salaries imposed in other eurozone countries struggling to contain their sovereign debt.

The official forecast of 0.8 per cent growth next year is above most independent forecasts, but Mr Pierre Moscovici [finance minister] said: "I am certain that if Europe steadies, then we are going to achieve this 0.8 per cent or more."

For starters, with government spending in France accounting for 55% of GDP, those are not "Tough Measures" those are idiotic measures. France needs to reduce government spending and ease work rules. Instead it has tightened pressure on companies laying off workers.

If Wishes Were Fishes

The French Finance minister is "certain that if Europe steadies, France will achieve 0.8 per cent growth or more". That is about as meaningful as this statement by me "I am certain that if I had a billion dollars, I would be a billionaire".

Simply put, neither Europe nor France is going to steady, but given France's growth is currently 0%, steady would not be enough anyway.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Can the Fed Fight Droids and Win? Apple's SIRI, Driverless Trucks, What's Next? Riveting Video: Are Droids Taking Our Jobs?

Posted: 27 Sep 2012 11:48 PM PDT

Today, a single farmer can produce as much goods as 100 farmers a half-century or less ago. That freed up labor for manufacturing and the service economy.

However, droids are now replacing humans in both manufacturing and services.

When does it stop?

Every time I go into a grocery store, I see more self-service checkout lanes and fewer manned ones. When RFID checkout comes into vogue, and it will quickly, an entire grocery basket will be scanned at once, and even fewer checkout clerks will be needed.

For a discussion of RFID, please see JCPenney to Eliminate All Checkout Clerks, Instead Using RFID Chips and Self-Checkout.

With each technological advance more and more goods and services are produced by fewer and fewer people. In isolation, that drives down costs, and in the process, standards-of-living have soared.

Because of ever-increasing productivity, it's easy to show that deflation is the natural state of affairs.

But what does that mean looking ahead? Will there be any jobs left? If so where? And what happens to the Fed's effort to prevent falling prices?

Riveting Video: Droids Taking Our Jobs

Let's start off with an entertaining, yet scary video by Andrew McAfee who asks Are droids taking our jobs?

Working Age Population vs. Projected Jobs

Notice the widening gap. Moreover McAfee states "If these predictions are accurate, that gap is not going to close. The problem is I do not think these predictions are accurate. In particular, I think my projection is way too optimistic. ... Because when I look around I think we ain't seen nothing yet when it comes to technology."

Video Discussion Points

Free Language Translation
Apple's SIRI
An article on Forbes about Apple, written by an algorithm (It's not decent it's perfect says McAfee). I tracked down the article: Forbes Earnings Preview: Apple, written by "Narrative Science".
Jeopardy: IBM Watson computer vs. Human who won 74 times in a row
If SIRI functionality increase according to Moore's Law (which it will) it will be sixteen times better than today, six years from now
Google Autonomous Car

Google Autonomous Toyota Prius Car

Managing the Transition to a Workerless Society

"There are 3 and a half million truck drivers and they will be impacted by this technology. .... We are going to transition into an economy that is very productive and just does not need a lot of human workers. Managing that transition is going to be the greatest challenge that our society faces" says McAfee.

In spite of that gloom for 13 minutes, McAfee concludes on a positive note, quoting Freeman Dyson: "Technology is a gift of God. After the gift of life, it is perhaps the greatest of God's gifts. It is the mother of civilizations, of arts, and of sciences."

Play the 14 minute video. It is riveting.

Can the Fed Fight Droids and Win?

The Fed wants to increase jobs and wages. It is fighting a battle it cannot possibly win. Forcing down interest rates while hoping to force up labor costs simply increases desire of companies to replace humans with droids.

We would get there anyway, as technology always improves. However, the Fed, by attempting to do the impossible, is actually speeding up the loss of jobs.

Living Wages

Who (besides the Fed and seriously misguided economists) does not like falling prices?

The problem with the "living wage" concept is not that wages are too low, but rather excess money from the Fed has driven up costs of goods and services.

People have been conditioned (by the Fed) to believe they need higher wages. What they really need is lower prices.

Technology, demographics, attitudes, and increasing lifespans, all mandate a need for lower, not higher prices.

If the Fed "succeeds" in further driving up prices, it will destroy the middle class because the technological rampage is sure to increase job losses for skilled labor, at least for the foreseeable future.

The Fed cannot defeat droids. Unfortunately, the Fed does not understand it is exacerbating the problem. Sadly, the Fed does not even understand the nature of the forces it is fighting.

Addendum:

It never fails. Someone misses obvious implications of what I said. One person ranted and raved that increased productivity is a good thing. Of course it is.

I specifically stated "standards-of-living have soared" as a result of technology. And of course that is a good thing.

My problem clearly is not technology and the deflationary effect that has on wages and prices (both good things), my problem is the Fed's attempt to counteract those forces. The result has been an increase in the wealth effect of those with first access to money, namely banks, the already wealthy, and government bureaucrats.

If you are looking for a reason the 1% have done so well lately, simply look at the policies of the Fed coupled with technology that is going to reduce the need for human labor "for the foreseeable future".

I have stated many times there will be another wave of job creation based on new technologies (most likely energy) at some point in the future but I do not know when that may be.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Damn Cool Pics

Hilarious Facebook Fails

Posted: 28 Sep 2012 06:04 PM PDT

Seth's Blog : How to downgrade

How to downgrade

Sometimes, your organization will be tempted (or forced) to offer some of your customers less than they've received in the past. Perhaps you need to close a local store so you can afford to open a better one a few miles away. Or reroute a bus line to serve more customers, while inconveniencing a few. Or maybe you want to replace a perfectly good free mapping application with a new, defective one so you can score points against your hometown rival in your bid for mobile domination.

A few things to keep in mind:

1. When possible, don't downgrade. People are way more focused on what you take away than what you give them. Many times, particularly with software, it's pretty easy to support old (apparently useless) features that a few rabid (equals profitable, loyal and loud) customers really depend on.

2. When it's not possible to avoid a downgrade, provide a bridge or alternatives, and mark them clearly and discount them heavily. In the case of Apple maps on the new iphone, it would have been really easy to include links or even pre-installed apps for other mapping software. It's sort of silly to make the Lightning adapter a profit center. When you cancel the all you can eat buffet, be generous with the gift cards given to your best customers.

3. If you can't build a bridge, own up. Make it clear, and apologize. Not after an outcry, but before it even happens. The genius Francois at the Grand Central Apple store insisted that my hassles with the Music Match feature in iTunes were merely my "opinion," and all the steps I had to go through to move the audio books I'm reviewing from one device to another were in fact good things. It's silly to expect your customers to care about your corporate priorities or to enjoy your corporate-speak. If you've taken something away from them, point it out, admit it and try to earn a chance to delight them again tomorrow.

Apologizing to your best users is significantly more productive than blaming them for liking what you used to do.