Mish's Global Economic Trend Analysis |
- Switzerland Postal Service Tests Drone Package Delivery; Reader Mailbag on Today's Grounding of All United Flights
- Greece Requests 3-Year ESM Bailout, Promises Reform, Warns on "Austerity Laboratory"; Another "Final" Chance; Majority Believe Grexit
- Chinese Stock Market Nosedive Continues; China Warns of Panic, Irrational Selling; Over Half of Companies Halted; Pent-Up Demand to Sell
| Posted: 08 Jul 2015 12:56 PM PDT This morning reader "PSB" sent me a link to United Airlines Grounds All Flights in the US Over Computer Issues. PSB asked "And how will this be prevented?" He commented "Insurance industries will not be able to stop the easy fear campaign old ways will scare the masses away from the future. A 15 year old DREAMS of a driver's license and independence. You know that sense of freedom to turn left when one is supposed to turn right is second to the inevitable auto taxi culture?" His question seemed reasonable for about 10 seconds. The answer should be easy to spot: Unlike airlines, there is no central computer controlling the flight or whereabouts of all cars. Simply put, there is no potential centralized computer error to prevent. Will there be problems? Of course there will be. There were also problems going from horses to cars. The convenience of cars guaranteed whatever problems arose would be solved. And they were. Yes, there will be software updates and bugs with autonomous cars. But does that radically differ from mechanical recalls? Not really. PSB is concerned about problems that cannot possibly happen or will be resolved quickly as they arise. Fearmongering? Nor will there be any lasting fearmongering campaigns. The irony here is that "PSB" has the setup backwards. Insurance rates will plunge because there will be fewer accidents. I expect many of them to go out of business. Finally, "PSB" has not grasped the changing dreams of millennials who view transportation only as a means of getting from point A to point B, nor the changing needs of aging boomers who have difficulty with night vision. Technology marches on, whether people believe it will or not. Drone Pizza Delivery On December 3, 2013, I asked How Will Pizzas Be Delivered? Do You Tip a Drone? Do You Tip a Drone?Switzerland Tests Drone Package Delivery Delivery by drone took a big leap forward this past week. The Swiss postal service announced Postal Drone Trials. Switzerland's postal service has begun practical trials of its drone-based postal delivery service, the organisation announced in a post today. The project is a collaboration between Swiss Post, Swiss World Cargo and California-based drone startup Matternet, which is supplying the lightweight airborne carriers.Project Wing and Alibaba
Drone delivery may be further off than antonymous cars due to regulatory concerns and genuine insurance issues. One can easily dream up all sorts of problems with drones regarding airspace flight paths, mid-air crashes, restricted space issues, etc. So what? The problems will all be solved one-by-one. Peak Cars, Peak Drivers The need for drivers of all sorts will vanish as I stated yesterday in "UberCab" vs. Al Gore's $90 Trillion Plan to Rid World of Cars: Uber CEO Asks Tesla for 500,000 Autonomous Cars in 2020; Peak Cars? By 2020 (more or less), there will not be any discourteous Uber drivers, bad drivers, or unresponsive drivers because there will not be any Uber drivers at all.Pertinent Observation The pertinent observation of the week goes to NewFedFAA. He responded to my post with ... I'll make a prediction of my own: Within a few years of their introduction, autonomous cars will be so much safer than human driven cars you will not be able to afford insurance on a human operated car. They will force people into robot cars in very short order. That's a person thinking clearly. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 08 Jul 2015 10:55 AM PDT After rallying on every bit of warrantless hope lately, today the stock markets continued there merry way: down. This is likely due to the fact that China is far more important globally than Greece, and for the first time in a while, there are a couple of simultaneous crises: One in the eurozone, and one in China. The real panic party starts when the US gets into the act with another recession or even a slowdown from the second quarter GDP bounce. Meanwhile, we have another "final chance" for Greece to do the wrong thing: accept another bailout and deepen its recession. The latest "final" deadline is Sunday. It follows numerous "final" deadlines over the past month. We Really Mean It This Time Christian Noyer, head of the Banque de France and a member of the ECB's decision-making governing council, said "It is the final deadline, afterwards it is too late. I fear that if there is no agreement on Sunday the Greek economy will collapse and there will be chaos." There does seem to be an "air of finality" this time because Greek banks are insolvent, flat out of cash. Then again, I don't think the real dealing begins until after Greece is forced out of the eurozone. Majority Believe Grexit Will Happen And for the first time ever, a majority of people polled feel that Grexit is the likely outcome. Here's the question of the day: Is Grexit what Alexis Tsipras, the Greek prime minister, really wanted all along? If so, and assuming that's what happens, he played his hand masterfully. His request for a 3-year ESM bailout and his caving in to some demands makes it appear he hopes to avoid Grexit. Greece Requests 3-Year ESM Bailout The Guardian reports Greece Requests 3-Year Bailout and Promises Reforms Within Days. Greece has submitted an application for a third bailout programme, in an attempt to avoid crashing out of the eurozone.Promises, Promises Tsipras made promises of pension reform and tax reform. But are those anything he can realistically promise? Greek parliament would have to approve those changes, and there is no sign his own party would even be willing. Austerity Laboratory The Financial Times quoted Tsipras on the "Austerity Laboratory". Tsipras told the European Parliament that both sides in negotiations have been "called upon to produce a fair compromise", arguing that a deal without public backing inside Greece was futile. "My country has been transformed into an austerity laboratory. This experiment has not been a success," Mr Tsipras said. "We demand an agreement with our neighbours, one that gives us a sign we are exiting from the crisis which will demonstrate light at end of [the] tunnel." Those statements are simply not in alignment with reform promises. Moreover, Chritian Noyer warned "In the last six months we maintained the lifeline set up for Greek banks and put enormous sums of money on the table. Our rules oblige us to stop immediately at the point when there is no prospect of a political accord on a programme, or at the point when the Greek banking system crumbles — which would happen if it enters generalised default on all its debts." Finally, Greece requested another "bridge loan", but the eurozone leaders crammed that in Tsipras' face saying that offer had been allowed to lapse and Athens must now come forward with a more comprehensive plan for them to agree to a new deal. Anyone Really Want a Deal? Here's the second question of the day: Does either side really want a deal? Based on statements by Greece and the creditors it appears both sides would be happy with Grexit as long as they can blame the other party. Let's hope so. Another bailout will just be additional money that will be defaulted on. It's time to face the facts. What cannot be paid back, won't be paid back. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 07 Jul 2015 11:26 PM PDT Nosedive Panic The crash in Chinese equities continues amid regulators' talk of panic and irrational selling. Ironically, China has banned the use of terms like 'equity disaster' and 'rescue the market' in analyst's reports on the stock market. Over Half of Companies Halted The Guardian reports China Stock Markets Continue Nosedive as Regulator Warns of Panic. Chinese stock markets tumbled again on Wednesday as investors shrugged off a series of support measures by Chinese regulators, including the central bank's first public statement in support of the market since it cut interest rates in late June.Fresh Turmoil The Financial Times reports Fresh Turmoil Hits China's Stock Market. China's central bank stepped up state support for sinking stocks on Wednesday, as investors rushed to sell what they still could after a fresh wave of share suspensions that have now halted trading in half the market.Hong Kong Hit Reuters reports China Stocks Slump Again, More Companies Halt Trading; Hong Kong Also Hit The panic in mainland markets is rippling across the border, knocking the Hong Kong market down more than 4 percent. Overseas-listed Chinese companies also slumped.$SSEC Shanghai Index  Irrational Selling? Is there irrational selling? No, is the easy answer. There was irrational margin-fueled buying, largely done by kids who did not graduate from high school. Pent-Up Demand to Sell Companies that purposely halted their shares because they used those shares as loan collateral are in serious trouble. Those who want out, cannot get out. The moment people can get out, many will choose to do just that. In halting shares, companies have made three errors
Stupid is as Stupid Does Using inflated share prices as collateral is about as dumb as you can get, but corporations make inane decisions all the time. Here's two examples:
Some never learn. Alternatively, they have unfounded faith the Fed will always come to their rescue no matter what idiotic things they do. As I have pointed out, the Fed is not in control. Rather, unfounded belief the Fed is in control, is what keeps things afloat. If the Fed was truly in control, there would not have been a dot-com collapse in 2000, a housing crash in 2007, and another bubble ready to pop right now. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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