Mish's Global Economic Trend Analysis

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Fun Night for the Eurosceptics: UKIP and Front National Storm Brussels; Infighting Begins Posted: 25 May 2014 11:04 PM PDT It was a fun night for the Eurosceptics. Nigel Farage's UKIP was the top vote getter in the UK with about 29% of the vote Marine Le Pen's Front National party was the top vote getter in France with 26% of the vote The Danish People's party is the largest party in Denmark with about 25% of the vote Beppe Grillo's Five Star Movement is a likely second-place finisher in Italy  Alexis Tsipras' Syriza part is the top vote getter in Greece with about 26% of the vote Eurosceptic Earthquake The Financial Times reports Ukip Leads Populist Earthquake. The UK Independence party and France's far-right Front National stormed to victory in European elections on Sunday night, as populist and nationalist parties across the continent dealt a heavy blow to the European project. Nigel Farage, Ukip leader, said the result represented an "earthquake", while Marine Le Pen, the FN leader, said that there had been a "massive rejection of the EU"; mainstream politicians struggled to come to terms with what had happened. Manuel Valls, the French socialist prime minister, called the FN victory "a shock, an earthquake that all responsible leaders must respond to", as President François Hollande prepared to convene his cabinet to discuss the result. In Britain, Labour was battling with Tories for second place , with the opposition party expected to just edge it. Nick Clegg, the pro-European Liberal Democrat leader who confronted Mr Farage in two televised debates on Europe, was set to lose most of his 12 MEPs. By 2am the Lib Dems had won just one seat, with London results delayed. Danny Alexander, Lib Dem Treasury minister, said the results were "pretty awful". Eurosceptics Storm Brussels Also consider Eurosceptics Storm Brussels France's far-right Front National stormed to victory in European elections on Sunday night, leading an unprecedented surge in support for anti-EU parties across Europe that was set to reverberate far beyond Brussels politics. The FN, led by Marine le Pen, claimed victory against both the centre-right UMP and President François Hollande's ruling Socialist party for the first time in a nationwide vote, a stunning defeat for the mainstream parties in Europe's second-largest economy. Manuel Valls, the French prime minister, called the FN victory "a shock, an earthquake that all responsible leaders must respond to". Ms Le Pen said the victory for the fiercely anti-EU and anti-immigration FN was an "immense honour", declaring: "What has happened tonight is a massive rejection of the EU." She said it was the "first step in a long march" to the "recovery of our identity" from the EU and the end of austerity policies. The FN was expected to take 25 of France's 74 seats in the European parliament, up from the three seats it won in the last election in 2009. It was the most dramatic result achieved by the party since Ms Le Pen's father Jean-Marie Le Pen won through to the final round of the presidential election in 2002. In Germany, the neo-Nazi party was expected to win one seat in the assembly for the first time. The anti-euro Alternative für Deutschland party was set to get 7 per cent. Jean-Francois Copé, president of the UMP, conceded defeat in France, saying the FN vote was a sign of "gigantic anger" among the French electorate against the policies of Mr Hollande. The Socialist party, also hammered in local elections in March, was beaten into third place in one of its worst election defeats in France. The gains of the populists could be sufficient for Ms Le Pen to form an anti-EU group with other like-minded parties. That would give them extra funds and speaking rights to destroy the "Brussels monster". According to exit polls released by the European Parliament, the European People's party centre-right grouping in the assembly is set to win the elections with 212 seats, followed by the Socialists with 185; the Liberals with 71; and the Greens 55. Eurosceptic and anti-establishment parties from both left and right won 228 seats. Congratulations for a well-deserved victory for the Eurosceptics. That said, don't expect much change. As noted before, the center-left and center-right parties will act in union to block any anti-euro measures. Race for Commission Presidency The EU Observer reports Juncker Declares Victory in Race for Commission Presidency. Jean-Claude Juncker declared victory in the European elections on Sunday (25 May), and staked his claim as the first man in line to claim the European Commission presidency. With partial results and exit polls suggesting that the centre-right EPP had claimed 212 seats in the European Parliament to 185 Socialists, Juncker, the former prime minister of Luxembourg, was presented as the next president of the EU executive by jubilant party supporters. "As lead candidate of the largest party, I have won the election," he told reporters in the Parliament hemicycle. "The EPP has got a clear lead, a clear victory." He also insisted that he would not stand aside for another EPP candidate and issued a warning to EU leaders not to "ignore" the results by opting to "select the President in corridors". Leaders of the Parliament's political groups will meet on Tuesday morning to begin the process of allowing a candidate to build a majority in the EU assembly. EU leaders will then gather in Brussels on Tuesday evening to have their first discussions following the elections. Following nomination by EU leaders, a successful candidate will need the support of at least 376 deputies in the 751-member Parliament. But Juncker stated that he would seek to build a broad majority of pro-European forces, including the Green and Liberal groups as well as the Socialists. "I will not be on my knees with the Socialist party … but even party No 1 has to make compromises," he said, adding that he had "a lot of sympathy with Greens and friends in the Liberal group". But Socialist candidate Martin Schulz refused to concede defeat and insisted that he, as well as Juncker, would try to form a majority. Infighting Begins And so the coalition infighting begins. The Euroscpetics will not vote for either Juncker or Schulz so it is going to be a difficult process coming up with 376 votes. Should Juncker ultimately prevail, he will not be willing to bow down to UK prime minister David Cameron's proposed rule changes. The whole setup is messier than it appears at first glance. Significant rule changes which Cameron has promised before an up-down vote on the UK staying in the EU seems highly unlikely, at best, no matter who triumphs as EC president. 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.

Driverless Cars Legally Hit Roads as California Issues Licenses; The Last Mile Posted: 25 May 2014 09:59 AM PDT In August of 2013 I wrote Message to 5.7 Million Truck Drivers "No Drivers Needed" Your Job is About to Vanish. The key word in that sentence is "about". I did not mean immediately, but I did mean a lot sooner than truck drivers and the general public expect. Most protested. I received many emails saying this would not happen for decades. Many truck drivers thought it would never happen. Most mentioned insurance issues. Yes, there are problems, but time has marched on even quicker than I thought. TechCrunch reports California Will Start Granting Licenses For Driverless Cars In September. Come September, the California Department of Motor Vehicles will begin granting licenses to select driverless cars and their human co-pilots, which will make it a bit less legally iffy as to whether or not they're actually allowed to be on a public road. The good news: The license will only cost $150 a pop, and that covers 10 vehicles and up to 20 test drivers. The bad (but probably actually good) news: You probably can't get one, so don't go trying to make your own Googlecar just yet. Stiff License Terms Yes, the terms of the license are stiff including $5,000,000 insurance against personal injury, death, or property damage. And a test driver has to be able to take immediate control of the car at all times. Nonetheless, the licensing is a big step forward. Totally driverless cars are but a single step away. All that needs to happen is for California to eliminate the requirement that someone has to be in the car at all times to take control. A big issue is that radar can detect size and shape of objects, but it does not have human judgement regarding danger. For example, a balloon blowing across the road is a much different thing from a hunk of metal the same size sitting in the road. Such difficulties will be overcome. Incentives and Implications The implications on the shipping business are staggering. A full-time truck driver might cost as much as $100,000 a year. The incentive to get rid of millions of full-time drivers is massive. A July 2013 Truckers Report headline reads ATA: Self-Driving Trucks Are "Close To Inevitable" However, the article itself dismissed the idea totally. "People come up with these grandiose ideas," says Bob Esler, a commercial trucker for almost 50 years. "How are you going to get the truck into a dock or fuel it?" And then there's loading and unloading. Pre-trip inspections. Signing for drop-offs and pickups. Making sure cargo is properly secured. Making sure the cargo that's being loaded actually gets loaded. The list just keeps going on and on. The Last Mile Many of the objections in the above article have to do with the last mile. Let's assume someone has to load the truck. Let's also assume an actual skilled driver has to dock the truck and make the final delivery (arguably a bad assumption). Yet, even if those assumptions are true, nothing stops a trucking company from having distribution facilities right off an interstate near major cities, where local drivers deliver the goods the last mile. Why can't all but the last few miles be driverless even if a skilled driver is needed some step of the way for safety reasons? Technology marches on at a breathtaking pace. We might actually see commercial driverless vehicles on the roads within a few years. 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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