Mish's Global Economic Trend Analysis |
- France Fesses Up: "Deficit in 2014 Much Higher than Expected", Budget Needs Revisions Yet Again
- Beppe Grillo Seeks Referendum to Abandon Euro, "At War with ECB Scum, Not ISIS or Russia!"
- Businesses Moving Too Quickly to Robots? Will 1 in 3 Jobs Vanish by 2025?
| France Fesses Up: "Deficit in 2014 Much Higher than Expected", Budget Needs Revisions Yet Again Posted: 14 Nov 2014 06:28 PM PST France has been in constant violation of eurozone deficit rules for years, but then again, so has nearly every other eurozone country. Spain and France Deficit Violations Both Spain and France have constantly pushed back goals to meet stated targets. Spain has pushed back deficit targets at least six times by my count (official count may vary). I also have pages on France violations of deficit rules. Broken Promises Other sources report similar stories. For example, please consider this Reuters September 2014 headline: France Breaks 2015 Deficit-Cutting Promise. France announced on Wednesday it was breaking the latest in a long line of promises to European Union partners to cut its public deficit, conceding it now would take until 2017 to bring its finances in line with EU rules.The Agreement France agreed to cut its budget deficit to 3% by 2015. I am sure we can find agreements for prior years. Here's the humorous part (from September): Sapin insisted France was not seeking to change or suspend the rules but wanted the deteriorating outlook for growth and inflation this year and next to be taken into account.No Change in Rules? On November 1, and in regards to France, The Economist says Budget, Fudge It. France had set itself up for a collision in September, when President François Hollande's government unveiled its growth forecast. This showed that the country would fail to cut its budget deficit, as it had promised, to 3.8% of GDP this year and 3% next. Instead, the deficit would rise to 4.4% in 2014, before dropping back to 4.3% next year. France, announced Michel Sapin, the finance minister, would not reach the euro zone's 3% ceiling, originally promised by 2013, until 2017.4.1% Next Year? Really? The compromise, as usual, was to give France more time if France went half-way. After rounds of infighting, France said something to the effect "OK we will reduce our deficit from 4.4% to 4.1% in 2015". Flashback April 10, 2014: Bloomberg reports France Must Meet 3% Budget Deficit Target for 2015, Sapin Says French Finance Minister Michel Sapin said his country needs to stick to a budget deficit target next year of 3 percent of gross domestic product to follow European Union rules.In September we learned the shortfall rose! Today we learn .... Deficit Much Higher than Expected Le Monde reports Government Deficit in 2014 Much Higher than Expected. The government presented Wednesday, November 12, a draft amending budget for 2014, which represents slippage in the deficit. The deficit will reach 88.2 billion euros at the end of 2014, 4.3 billion more than what was expected this summer.Weak consumer spending? A deteriorating economic environment? VAT shortfalls? Extra government spending? Deficit shrinkage to 4.3% instead of 4.1%? Gee who coulda thunk? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Beppe Grillo Seeks Referendum to Abandon Euro, "At War with ECB Scum, Not ISIS or Russia!" Posted: 14 Nov 2014 11:24 AM PST Beppe Grillo, leader of M5S (Five Star Movement), Italy's second largest political party, seeks a referendum for Italy to leave the Euro. One might think this would be news, but a search shows that only RT, the BBC, ZeroHedge (where I found the story), and Prison Planet picked up the story. "Ditch Euro, Defend Sovereignty" RT had the story first, way back on October 12, so let's start there. Please consider 'Ditch euro, defend Italy's sovereignty!' Eurosceptic leader calls for referendum. The Italian government is not effective in restoring jobs and helping people, said Beppe Grillo, the leader of Italy's anti-establishment M5S, which burst onto the political scene last year winning 25 percent of the vote in its first parliamentary election in 2013.European Parliament Elections In the May European Parliament elections, Beppe Grillo's M5S party garnered 21% of the vote, second only to PD's 41% of the vote. Yet, even though Grillo repeated his "abandon the euro message" recently, the only major news outlet to pick up the story was the BBC. New York Times, Financial Times, Bloomberg, Washington Post, where are you hiding? "We're at War with ECB, Not ISIS or Russia!" The BBC reports Italy's Beppe Grillo Calls for Referendum on Leaving Euro. Full Transcript A referendum on the Euro. Next week we start collecting signatures. We will bring to parliament 3 or 4 million signatures, and this time we will have 150 of our own MPs [Members of Parliament] in parliament. And then we will ask for a referendum, something that wasn't done in 1989. We've got all the parties in favor of leaving the euro with us. We have two thirds of the parliament."Eventually Will Come a Time" Somehow this is not news. Not even the BBC provided that transcript, but I do thank the BBC for the embedded translation that I transcribed. I keep repeating .... "Eventually will come a time when a politician will hold up a copy of the EMU treaty, declare it null and void, and the debt null and void right along with it. That politician will be elected." Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Businesses Moving Too Quickly to Robots? Will 1 in 3 Jobs Vanish by 2025? Posted: 14 Nov 2014 10:26 AM PST Businesses Moving Too Quickly? Are businesses are moving too quickly to robots? Is any job safe? Patrick Thibodeau at Computer World discusses the idea things are moving "too fast" with a review of Nicholas Carr's new book, The Glass Cage, Automation and Us. Please consider Automation Could Take Your Skills -- and Your Job by Patrick Thibodeau. The Glass Cage examines the possibility that businesses are moving too quickly to automate white collar jobs, sophisticated tasks and mental work, and are increasingly reliant on automated decision-making and predictive analytics. It warns of the potential de-skilling of the workforce, including software developers, as larger shares of work processes are turned over to machines.Interview with Carr Thibodeau posted a lengthy set of interview questions in regards to the book, along with answers from Carr. Here are a few snips (emphasis added). CW: What is the worry here? If I can get into my self-driving car in the morning, I can sit back and work on other things. Carr: There are two worries. One is practical and the other is philosophical. We have to figure out how to best balance the responsibilities between the human expert or professional and computer. I think we're going down the wrong path right now. We're too quick to hand over too much responsibility to the computer and what that ends up doing is leaving the expert or professional in a kind of a passive role: looking at monitors, following templates, entering data. The problem, and we see it with pilots and doctors, is when the computer fails, when either the technology breaks down, or the computer comes up against some situation that it hasn't been programmed to handle, then the human being has to jump back in take control, and too often we have allowed the human expert skills to get rusty and their situational awareness to fade away and so they make mistakes. At the practical level, we can be smarter and wiser about how we go about automating and make sure that we keep the human engaged. Then we have the philosophical side, what are human beings for? What gives meaning to our lives and fulfills us? And it turns out that it is usually doing hard work in the real world, grappling with hard challenges, overcoming them, expanding our talents, engaging with difficult situations. Unfortunately, that is the kind of effort that software programmers, for good reasons of their own, seek to alleviate today. CW: Gartner recently came out with a prediction that in approximately 10 years about one third of all the jobs that exist today will be replaced by some form of automation. That could be an over-the-top prediction or not. But when you think about the job market going forward, what kind of impact do you see automation having? Carr: I think that prediction is probably over aggressive. It's very easy to come up with these scenarios that show massive job losses. I think what we're facing is probably a more modest, but still ongoing destruction or loss of white collar professional jobs as computers become more capable of undertaking analyses and making judgments. A very good example is in the legal field, where you have seen, and very, very quickly, language processing software take over the work of evidence discovery. You used to have lots of bright people reading through various documents to find evidence and to figure out relationships among people, and now computers can basically do all that work, so lots of paralegals, lots of junior lawyers, lose their jobs because computers can do them. I think we will continue to see that kind of replacement of professional labor with analytical software. The job market is very complex, so it's easy to become alarmist, but I do think the big challenge is probably less the total number of jobs in the economy then the distribution of those jobs. Because as soon as you are able to automate what used to be very skilled task, then you also de-skill them and, hence, you don't have to pay the people who do them as much. We will probably see a continued pressure for the polarization of the workforce and the erosion of good quality, good paying middle class jobs. CW: What do you want people to take away from this work? Carr: I think we're naturally very enthusiastic about technological advances, and particularly enthusiastic about the ways that engineers and programmers and other inventors can program inanimate machines and computers to do hard things that human beings used to do. That's amazing, and I think we're right to be amazed and enthusiastic about that. But I think often our enthusiasm leads us to make assumptions that aren't in our best interest, assumptions that we should seek convenience and speed and efficiency without regard to the fact that our sense of satisfaction in life often comes from mastering hard challenges, mastering hard skills. My goal is simply to warn people. I think we have a choice about whether we do this wisely and humanistically, or we take the road that I think we're on right now, which is to take a misanthropic view of technological progress and just say 'give computers everything they can possibly do and give human beings whatever is left over.' I think that's a recipe for diminishing the quality of life and ultimately short-circuiting progress. Is Carr a Luddite? Thibodeau claims "Carr's book is not a defense of Luddites". Let's look up the term Luddite. According to Merriam-Webster a Luddite is "one of a group of early 19th century English workmen destroying laborsaving machinery as a protest; broadly: one who is opposed to especially technological change" Carr is not an extreme Luddite to the extent he wants to destroy machinery in protest. However, in the broader sense, it's easy enough to make a case that he is indeed a Luddite. Loss of Skills
Computers, Robots, and the Quality of Life The most curious position of Carr is his conclusion: Computer technology is "a recipe for diminishing the quality of life". Ring the eject buzzer on that one. With the possible exception of warfare and nuclear accidents, there has never been any technological advance in history that was a "recipe for diminished quality of life". Yes, disruption is unwelcome to many. But Carr's worries are no different than those who worried about cars replacing horses, the cotton gin replacing seed separators, or the telephone replacing the telegraph. Does anyone pity the widespread loss of Morse Code skills? Curiously, although the slide rule vanished, Morse Code did not go away completely as the link above shows. It still has some limited use applications, and yes, I could do an SOS in Morse Code (but no one would pay me a dime for that skill). Will 1 in 3 Jobs Vanish by 2025? Is Gartner right that One in three jobs will be taken by software or robots by 2025? If so, should there be a concern? Real Concern The real concern should not be the loss of jobs, but rather the Fed's response and governmental responses to price-deflation aspects. Technology is inherently price deflationary. It's also wage deflationary except for those at the top-end of needed skills. Central bank efforts to achieve 2% inflation in a hugely deflationary technological boom with a simultaneous and equally deflationary demographic shift is a huge problem. In addition, liberal efforts to raise the minimum wage exacerbates the trend to move to robots. If there is a "premature" move to robots, blame the Fed and governments, not the technology, and not businesses making the shift. Question on Wealth Distribution Reader Michael asks ... "As more and more wealth is produced using less and less labor, society will be faced with the question of how to distribute this wealth. Does only a tiny fraction of the world's population get to enjoy the wealth or, do we realize that technology is enabling humans to enjoy more leisure and still have a share of the wealth?" To answer Michael's question ... We should embrace technology and the increased standard of living that comes with it. Yes, those at the top-end have amazing lifestyles that most can only imagine. But, it's also true that the average US citizen today lives like a king (and much longer) than someone 200 or even 100 years ago. Every technological advance to date has been shared: computers, cell phones, television, sewing machines, radio, everything. It is inconceivable (actually impossible short of mass human extinction) for that trend to stop. Everyone shares sooner or later. Competition ensures that outcome. Yet, it's also inevitable that the need for certain skills dies along the way. In the short run, disruption is scary, especially to those immediately impacted. In the long run, the only fear should be of the central planner's (governments and central banks) response to such shifts. Those who fear technology have precisely the wrong concern. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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