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Germany Clashes With The U.S. Over Energy Geopolitics

Germany Clashes With The U.S. Over Energy Geopolitics

Nord Stream 2

The United States and the European Union (EU) are at odds over more than just the Iran nuclear deal – tensions surrounding energy policy have also become a flashpoint for the two global powerhouses.

In energy policy, the U.S. has been opposing the Gazprom-led and highly controversial Nord Stream 2 pipeline project, which will follow the existing Nord Stream natural gas pipeline between Russia and Germany via the Baltic Sea. EU institutions and some EU members such as Poland and Lithuania are also against it, but one of the leaders of the EU and the end-point of the planned project—Germany— supports Nord Stream 2 and sees the project as a private commercial venture that will help it to meet rising natural gas demand.

While the U.S. has been hinting this year that it could sanction the project and the companies involved in it—which include not only Gazprom but also major European firms Shell, Engie, OMV, Uniper, and Wintershall—Germany has just said that Washington shouldn’t interfere with Europe’s energy choices and policies.

“I don’t want European energy policy to be defined in Washington,” Germany’s Foreign Ministry State Secretary Andreas Michaelis said at a conference on trans-Atlantic ties in Berlin this week.

Germany has to consult with its European partners regarding the project, Michaelis said, and noted, as quoted by Reuters, that he was “certainly not willing to accept that Washington is deciding at the end of the day that we should not rely on Russian gas and that we should not complete this pipeline project.”

In July this year, U.S. President Donald Trump said at a meeting with NATO Secretary General Jens Stoltenberg that “Germany is a captive of Russia because they supply.”

…click on the above link to read the rest of the article…

More Italians Move Savings To Switzerland As Fears Of Banking “Doom Loop” Intensify

With the euro weakening against the Swiss franc (recently trading at session lows of 1.14) and Italian stocks and bonds tumbling once again on reports that the European Commission is planning to reject the Italian draft budget plan submitted earlier this week – a repudiation of Italy’s populist leaders that was widely anticipated – the Telegraph’s Ambrose Evans-Pritchard offered a glimpse into how middle-class Italians are reacting to the deteriorating relationship between Italy and the EU, and its attendant impact on the country’s banks and capital markets. In a trend that’s eerily reminiscent of the banking run that precipitated the near-collapse of the Greek banking system (most recently in 2015), Italians are scrambling to convert their euros into Swiss francs and stash them across the country’s northern border with Switzerland.

Swiss

Right now, the movement has mostly been limited to the wealthy. “The big players” have already gotten out…

The Swiss group Albacore Wealth Management told Italy’s Il Sole had received a wave of inquiries from Italians with €5m to €10m in liquid capital. The super-rich are already a step ahead. “The big fish have been organizing the expatriation of their wealth for some time,” it said.

…and those with between 200,000 euros and 300,000 euros in assets are moving more quickly, inspired by memories of desperate Greeks struggling with capital controls that restricted ATM withdrawals.

“There is fear creeping in,” said Massimo Gionso, head of family wealth managers CFO Sim in Milan.

“People are concerned that if we get into the same situation as Greece, they might find the banks are closed and they can take out only €50 a day from cash machines. They don’t want to risk it,” he told the Daily Telegraph.

…click on the above link to read the rest of the article…

Italian Bonds Slide After Official Warns Credit Rating Downgrade Possible

After starting off strong, Italian 10Y Yields have leaked wider all morning after a senior government official said on Wednesday that Italy’s 2019 budget may be rejected by the European Commission and a credit rating downgrade is also possible.

“Let’s say that the premise is there” for the commission to start an infraction process over the budget, Stefano Buffagni, cabinet undersecretary for regional affairs, said in an interview with Radio Capital cited by Reuters.

“Premier (Giuseppe) Conte is going to the EU to explain the motivations” behind the budget, he added.

With Moody’s and Standard & Poor’s due to review Italy’s credit rating this month, Buffagni said a downgrade “can’t be excluded and we must be ready” in case it happens. He added, however, that he did not think a downgrade would be justified because “Italy has very solid economic fundamentals”.

Meanwhile, Deutsche Bank economists said they think that Italy is squarely on a collision course with the European Commission, whose President Juncker said yesterday that there would be a “violent reaction” from other euro area countries if the Italian budget were to be approved.

The Commission has two weeks to decide on whether to ask for budget revisions. Nevertheless, Italian assets gained yesterday in the first trading session since the government finalized the budget plan amid the broad market euphoria. The FTSE-MIB gained +2.23%, pacing gains in Europe, and 10- year BTPs rallied -9.3bps, however much of this move is being reversed on Wednesday. Partially this reflected the broader risk-on sentiment yesterday, but it may also have been a reaction to a new poll showing Five Star + Northern League support at 58.6%, still a majority but at its lowest level in over six weeks.

Juncker Warns ‘The EU Cannot Survive Without Italy’

Ignoring warnings from the European Commission, the ECB and the European Commission (as well as practically every other supranational organization in Europe), the populist-led Italian government managed to submit their draft budget to the Commission before a midnight deadline – an outcome that was cheered by BTP traders, who bought back into Italian bonds, once again compressing the spread to bunds, which has blown out in recent months.

But rather than representing a deescalation of tensions between Italy and Brussels, the game of fiscal chicken in which both sides are presently engaged is instead entering its most acute phase, as Brussels now has two weeks to review the budget proposal before it can either accept the plan, or send it back with requests for revisions. And anybody who has been paying even passing attention to the populist government’s denigration of EU budgetary guidelines over the past few months should already understand that Brussels won’t just sit back and accept the budget for what it is.

Juncker

In fact, European Commissioner Jean-Claude Juncker hinted as much Tuesday morning when he told Italian reporters that accepting the budget would be tantamount to inviting an widespread revolt against the EU, per Italian newswire ANSA and the FT. Juncker also blasted Italy for abandoning the fiscal commitments it made when it joined the EU. However, though they have wavered from time to time, the Italians haven’t kept their intentions to press for a budget deficit equivalent to 2.4% of GDP a secret. Even Giovanni Tria, Italy’s economy minister, defended the draft budget, saying the deficit “would be considered normal in all Western democracies, not explosive.”

Undeterred by the fact that there’s absolutely no political will in the Italian government to back down from their budget stance, despite threats from the ECB to provoke a Greece-style banking crisis if the Italians don’t yield to EU rules.

…click on the above link to read the rest of the article…

Italy Declares War on Merkel and the EU

Italy Declares War on Merkel and the EU

Italy Declares War on Merkel and the EU

If there were ever any doubts that the leaders of the Euroskeptic coalition that now runs Italy has a plan to defy the European Union its proposed budget should quell them. Both Deputy Prime Ministers, Luigi Di Maio of Five Star Movement and Matteo Salvini of The League, were adamant about locking horns with European Union leadership over all issues of sovereignty between now and May’s European Parliamentary elections.

Their budget proposal which included both tax cuts and universal income blew past the EU budget limit of 2.0% of GDP, coming in at 2.4%. It has put their Finance Minister, Giovanni Tria, in a difficult position because Tria doesn’t want to negotiate this budget with Brussels, preferring a less confrontational, read more pro-EU, approach.

Salvini and Di Maio, however, have other plans. And since I began covering this story last year on my blog, I’ve said that it was imperative that Salvini force the issue of the Troika’s demands – the EU, European Central Bank and the International Monetary Fund – back down their throats on debt restructuring/forgiveness.

What I meant then, and I was focused on Salvini’s emergence as the leader of this fight, was that Salvini and Italy, because they are more than technically insolvent, have all the leverage in the negotiations. The size of their outstanding debt and the liabilities existent on the balance sheets of banks across Europe, most notably the nearly $1 trillion in TARGET 2 liabilities, are something Juncker, Draghi, Merkel and Christine LaGarde at the IMF simply cannot ignore.

But, to do this Salvini and now Di Maio have to make a good faith effort to negotiate a good deal for Italy with Brussels, Berlin and the IMF. This is why the budget squeaked past the 2.0% limit and then they walked it back to 2.0% but with provisions they knew would anger the EU finance ministers.

…click on the above link to read the rest of the article…

Does the United States strive for a new Cold War?

Does the United States strive for a new Cold War?

Donald Trump’s administration regularly increases military presence in Central Europe. The currently discussed idea is to create an American permanent military base in Poland, that is to say, a further shift of the US military presence towards the Russian border. The question arises whether, through the constant presence of the US Army in Poland, Donald Trump wants to improve the defense of the Old Continent or strives to play against each other the interests of individual members of the European Union. The weaker Europe is, the stronger is the United States.

Although the idea of American permanent military presence in Central Europe is not new, it gained much publicity after the September meeting at the White House between Polish President Andrzej Duda and Donald Trump. Warsaw suggested not only building a base but also a name for it: Fort Trump. After initial doubts, Washington, noting the benefits which it might derive, accepted this proposal.1)That’s why a few days later, Secretary of Defense Jim Mattis reported that certain areas are already being evaluated whether they are suitable for this purpose.2)Leaving aside the issue of allegedly improving the security of NATO’s eastern flank, there is more to see than meets the eye in the permanent presence of Americans in Poland. Warsaw perceives the United States as an ally in an ongoing dispute with the EU. Relations between Brussels and Washington have also deteriorated. Therefore, by relocating its troops to the east, the United States would be putting pressure on Germany to increase defense spending, import US LNG or veto Nord Stream II.

…click on the above link to read the rest of the article…

What Will Europe’s Internet Look Like After Passage Of Orwellian Directive?

Last month, members of the EU Parliament voted to advance a controversial copyright directive that contains provisions forcing tech giants to install content filters, while also setting in place a potential tax on hyperlinking.

The bill, known as Article 13, would filter everything anyone posts online and match it to a crowdsourced database of “copyrighted works” which anyone can add or change.


Good job, EU.
Once again, you have proven that your MEPs are old people who have not understood until today and who also boast of their “fight against unauthorized sharing” so that they leave like him:


Another portion of the directive, Article 11, is a “link tax” that would ban a quoting more than one word from an article which links to another publication – unless you are using a platform which has paid for a linking license. The link tax does however allow member states to create limitations and exceptions in order to protect online speech.

What comes next?

Now that the directive has passed through Parliament, the next step, according to the Electronic Frontier Foundation, is the “trilogues,” which are closed-door meetings between European government officials, the European commission and the European Parliament – which will be the last time that the Directive’s language can be substantially changed without a second debate in Parliament.

That said, one woman is committed to shining light on the secret discussions:

Normally the trilogues are completely opaque. But Julia Reda, the German MEP who has led the principled opposition to Articles 11 and 13, has committed to publishing all of the negotiating documents from the Trilogues as they take place (Reda is relying on a recent European Court of Justice ruling that upheld the right of the public) to know what’s going on in the trilogues).

…click on the above link to read the rest of the article…

ECB Hands Italy An Ultimatum: ‘Obey EU Budget Rules Or We Won’t Save You’

With the Washington Post stepping up to put a floor under US stocks Thursday afternoon by reporting that President Trump would meet Chinese President Xi Jinping at next month’s G-20 summit (while the headline soothed the market, it doesn’t change the fact that, as with everything involving the Trump administration, this too remains subject to change), investors have apparently overlooked the latest ominous headlines out of Italy. To wit, Reuters reported that the ECB won’t come to Italy’s rescue if its government or banks run out of cash unless the Italian government first secures a bailout from the European Union. Of course, this would almost certainly require that the populist coalition end its ongoing game of fiscal chicken with Brussels and abandon its  dreams of lowering the retirement age and extending a basic income to the Italian people – policies that would effectively secure a political future for M5S and the League.

In effect, the ECB’s latest trial balloon is tantamount to blackmail: Either the Italians agree to fall back in line and obey European budgetary guidelines, or the central bank will sit back and watch as bond yields surge, providing the ratings agencies even more ammunition to cut Italian debt to junk – effectively guaranteeing a Greece-style banking crisis as the liquidity taps are turned off.

ECB

And to eliminate any lingering doubts that this was a deliberate coordinated leak, Reuters cited “five senior sources familiar with the ECB’s thinking,” many of whom were “present at the economic summit in Indonesia.” Of course, the ECB sources explained that they are merely acting in the best interest of the monetary union. Because if Italy is allowed to shake off the yoke of European austerity and re-assert its sovereignty, then what would stop Spain or Portugal from doing the same?

…click on the above link to read the rest of the article…

Lega Popularity Rises With Each EU Confrontation: Major Event Coming

The EU conspiracy to oust Berlusconi succeeded because his popularity was on the skids. Lega is a far different story.

Eurointelligence has an interesting on rising Italian yields, Italy’s budget deficit, and the inability of the EU and ECB to do any thing about it.

One of the lessons of 2012 is that rising spreads in the eurozone can create a self-fulfilling dynamic once they breach a certain (unknown) level. For Italy, we don’t think spreads have reached that point at the current levels of just above 300bp. But another 50bp or 100bp could trigger a crisis. A rating downgrade is certain, but the markets are watching whether the downgrade will come with a stable or negative outlook. If it is negative, Italian bonds would be on the brink of losing their investment-grade status.

The nervousness is fuelled by defiant comments from Italian ministers. Paolo Savona said that, if the EU opts to reject the Italian budget, it will be up to the people of Italy to decide what to do next. This is where the situation today is so different from that of 2011 when an Italian president colluded with the ECB to remove Silvio Berlusconi. By then, Berlusconi had lost his majority in the chamber of deputies – and the support of the public at large. The Lega, by contrast, is currently seeing its support rise. And this continues with every row with the EU. It is therefore far from clear that a financial crisis would necessarily play into the hands of the EU and produce a more compliant Italian government, or at least a more compliant budget. The opposite might be the case. As of now, we see no signs of the Italian government backing down.

…click on the above link to read the rest of the article…

Britain and NATO Prepare for War on Russia in the Arctic

Britain and NATO Prepare for War on Russia in the Arctic

Britain and NATO Prepare for War on Russia in the Arctic

On September 30 the UK’s foreign minister, Jeremy Hunt, delivered an astonishing tirade, saying “The EU was set up to protect freedom. It was the Soviet Union that stopped people leaving. The lesson from history is clear: if you turn the EU club into a prison, the desire to get out won’t diminish, it will grow — and we won’t be the only prisoner that will want to escape.” His comparison of the EU to gulags of former years played well with many people in Britain, but was understandably regarded as totally inappropriate by the EU, whose spokesman’s polite observation was “I would say respectfully that we would all benefit – and in particular foreign affairs ministers – from opening a history book from time to time.”

The lunacy didn’t stop there. Not content with insulting the EU’s 27 countries, the government in London decided to whip up even more patriotic fervour by again trying to portray Russia as a threat to the United Kingdom.

In June 2018 the UK’s Sun newspaper carried the headline “Britain will send RAF Typhoon fighter jets to Iceland in bid to tackle Russian aggression” and since then Mr Williamson hasn’t altered his contention that “the Kremlin continues to challenge us in every domain.” (Williamson is the man who declared in March 2018 that “Frankly Russia should go away — it should shut up,” which was one of the most juvenile public utterances of recent years.)

It was reported on September 29 that Williamson was concerned about “growing Russian aggression ‘in our back yard’,” and that the Government was drawing up a “defence Arctic strategy” with 800 commandos being deployed to a new base in Norway. In an interview “Mr Williamson highlighted Russia’s re-opening of Soviet-era bases and ‘increased tempo’ of submarine activity as evidence that Britain needed to ‘demonstrate we’re there’ and ‘protect our interests’.”

…click on the above link to read the rest of the article…

Investigative Journalist Probing EU Corruption Found Brutally Raped And Murdered

Yet another tragic death of a high profile journalist is now raising questions. A Bulgarian journalist and TV personality who was in the midst of a deep investigation into alleged corruption involving EU funds has been found murdered in the Bulgarian town of Ruse, authorities said on Sunday.

The body of 30-year-old Viktoria Marinova was found in a local park on Saturday, and though so far police have presented the case as a tragic rape and murder unconnected with her professional work as a journalist, Bulgarian media were quick to suggest it could be linked to her EU investigations. Police said on Sunday she appeared to have been beaten, raped, and strangled to death in crime described as “exceptionally brutal”.

Major media outlets in the West, meanwhile, were quick to pick up on the suspicious nature of the timing of the heinous crime, with The Guardian noting that “The European commission and German government have urged Bulgarian authorities to bring to justice those responsible for the brutal killing of the journalist Viktoria Marinova, who had been reporting on alleged corruption in one of the EU’s newest member states.”

Viktoria Marinova worked for a Bulgarian TV station called TVN where she presented two investigative programs. Getty Images

Bulgarian Interior minister Mladen Marinov immediately tried to throw cold water on widespread speculation that she was targeted for here investigation journalism, saying there was no evidence of this: “It is about rape and murder,” he said in a statement. Marinov added that there was no evidence suggesting she had previously been threatened over her work.

…click on the above link to read the rest of the article…

Trader: Italy’s Situation Is Truly Unprecedented

If Italy is going to avoid a full-blown euro zone debt crisis that’s capable of causing turmoil in global financial markets, communication will be key.

Much of the investor complacency toward the threat from Italy’s debt crisis is the fallacy that worse scenarios have been survived elsewhere before.

Let’s be clear: no country in history that doesn’t control its own currency has ever had such a large debt pile. This situation is unprecedented.

It’s also the debt-to- GDP ratio that makes it particularly dangerous. Some analysts have pointed to the fact that France has been running much larger budget deficits for years, but France is a far larger economy with a smaller debt burden. Its debt/GDP ratio is just below 100%; the equivalent metric for Italy is over 130%.

This isn’t to argue that disaster is inevitable. If Italy and the EU convey some sense of coordinated belief that Italy’s debt burden will ease in the years ahead, investors will then be inclined to give the country the benefit of the doubt, especially given the yields on offer.

But there’s no sign of compromise as the deadline for budget submission approaches and the threat of ratings downgrades loom ever closer. On the weekend, European Commission President Jean-Claude Juncker called on Italy to redouble its fiscal efforts; Di Maio responded by saying the country won’t retreat on its fiscal plans.

Unless the relevant officials start communicating in a more positive and coordinated fashion, then Italian yields will continue to spiral and contagion will spread.

Five days ago, I wrote that the Italian debt crisis had crossed the Rubicon. It was exactly five days after Caesar’s crossing in 49 BC that the leaders of the Roman Republic fled the capital rather than making any attempt to compromise with Caesar. For the sake of more than just the Italian bond market, let’s hope we see a much more constructive reaction from today’s Italian government.

Italian Stocks, Bonds Collapse After EU Rejects Rome’s Budget Plans

Italian stocks tumbled with the FTSE MIB dropping 2.3% – the worst performer among major European markets on Monday – and hitting its lowest level since April 2017, while the country’s bonds plunged to the lowest level since February 2014 amid what now appears to be an inevitable showdown between Italy and the EU, after the European Commission said Italy’s budget plans are in breach of common rules.

Over the weekend, the European Commission told Italy it is concerned about its budget deficit plans for the next three years since they breach what the EU asked the country to do in July, but a defiant Rome insisted on Saturday it would “not retreat” from its spending plans.

In a letter to Italy’s Economy Minister Giovanni Tria, the Commission said that with a planned headline deficit of 2.4 percent of GDP in 2019, Italy’s structural deficit, which excludes one-offs and business cycle effects, would rise by 0.8 percent of GDP. Under EU rules Italy, which has a public debt to GDP ratio of 133 percent and the highest debt servicing costs in Europe, should cut the structural deficit every year until balance.

“Italy’s revised budgetary targets appear prima facie to point to a significant deviation from the fiscal path” commonly agreed by European Union governments, EU Commissioners Valdis Dombrovskis and Pierre Moscovici wrote in a letter to Italian Finance Minister Giovanni Tria. “This is therefore a source of serious concern,” the commission’s finance chiefs said in their letter Friday responding to a note sent by Tria the day before.

“We call on the Italian authorities to ensure that the Draft Budgetary Plan will be in compliance with the common fiscal rules,” the letter added at the same time as the council of EU ministers asked Italy in July to reduce that structural deficit by 0.6% of GDP next year, which means the deficit would be 1.4 points off track, Reuters reported.

…click on the above link to read the rest of the article…

Italy’s Debt Crisis Flares Up, Banks Get Hit, as Showdown with the EU Intensifies

Italy’s Debt Crisis Flares Up, Banks Get Hit, as Showdown with the EU Intensifies

Who will blink first?

A serious showdown is brewing in the Eurozone as Italy’s anti-establishment coalition government takes on the EU establishment in a struggle that could have major ramifications for Europe’s monetary union. The cause of the discord is the Italian government’s plan to expand Italy’s budget for 2019, in contravention of previous budget agreements with Brussels.

The government has set a public deficit target for next year of 2.4% of GDP, three times higher than the previous government’s pledge. It’s a big ask for a country that already boasts a debt-to-GDP ratio of 131%, the second highest in Europe behind Greece. To justify its ambitious “anti-poverty” spending plans, proposed tax cuts, and pension reforms, the government claims that Italy’s economic growth will outperform EU forecasts.

Brussels is having none of it. EU Commission President Jean Claude Juncker urged Italy’s Economy Minister Giovanni Tria to desist. “After having really been able to cope with the Greek crisis, we’ll end up in the same crisis in Italy,” he said. “One such crisis has been enough… If Italy wants further special treatment, that would mean the end of the euro. So you have to be very strict.”

On Wednesday ECB President Mario Draghi held a private meeting with Italian President Sergio Mattarella in Rome, at which he reportedly raised concerns about Italy’s public finances, the upcoming budget bill, and related stock-exchange and bond-market turbulence.

The meeting evoked memories of the backroom machinations that Draghi, together with his predecessor, Jean Claude Trichet, undertook to engineer the downfall of Italian premier Silvio Berlusconi in 2011 and his replacement with technocrat Mario Monte, after Berlusconi had posited pulling Italy out of the euro during Europe’s sovereign debt crisis.

…click on the above link to read the rest of the article…

NATO’s Manipulation Of The Macedonian Vote Exposes Its Modus Operandi

NATO’s Manipulation Of The Macedonian Vote Exposes Its Modus Operandi

Nearly two-thirds of Macedonian voters boycotted the faux referendum for changing their country’s constitutional name and facilitating its entry into NATO, yet the vehemence with which the bloc is still trying to get them to join exposes its Hybrid War and anti-democratic modus operandi.

NATO membership used to be motivated by a shared fear, however exploited, of a so-called “Soviet/communist threat” which made joining the military bloc a seemingly “natural” decision for the countries that did so during the Old Cold War. The US certainly pressured many of them behind the scenes, however, and it also exploited their membership for clandestine purposes such as embedding Gladio squads into their societies. The Soviet dissolution of 1991 removed the very reason for NATO’s existence, yet the organization survived and has been progressively reinventing itself throughout the subsequent two and a half decades.

At this point in time, it still functions as an anti-Russian alliance after the recent Western-initiated provocations of the New Cold War, but it’s also taken on so-called “anti-terrorist” functions by becoming what de-facto amounts to a recruitment center for American-backed mercenaries. Tiny European states that would otherwise have no interests in far-away battlefields such as Afghanistan have contributed a comparatively significant amount of their troops to this and other conflicts in order to advance America’s grand strategic interests, the success of which they’re told they also have a stake in.

The interim period between the Old and New Cold Wars from the 1990s until the early 2010s was marked by the rapid expansion of NATO eastward towards Russia’s borders as the bloc sought to partially rebrand itself as an “unquestionable” “rite of passage” for the EU-aspiring former communist countries of the former Warsaw Treaty

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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