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QUESTION: The bounce in the Euro is a fool’s’ game?

ANSWER: Absolutely. The Euro is doomed because especially if Le Pen loses, Brussels will be relieved and proceed as usual. The same problems will merely exist and no reform will come forward to save the day. A good wind will blow over the European banking system. You are expecting politicians to admit they were wrong and surrender power in Brussels. NOT GOING TO HAPPEN. As Einstein said, you will NEVER solve the problem of the Euro with the same thinking process.

A weekly closing above the 10860 level in the Euro will imply the rally will press higher to test the 112-114 level. Just look at the technical perspective on a monthly level. The Downtrend Line stands in May up at 12622. We are nowhere near reversing the trend in the Euro.

We have the French, British, and then German elections here in 2017. We do not expect total chaos before 2018. That seems to be the point of a major shift.

Things Just Got Serious in Europe’s War on Cash

January 29, 2017

Things Just Got Serious in Europe’s War on Cash

To protect citizens from threats as defined by apparatchiks in Brussels.

The central authorities in Europe just launched their most important offensive to date in their multiyear War on Cash. The new move comes directly from the European Union’s executive branch, the European Commission, which just announced its intention to “explore the relevance of potential upper limits to cash payments,” with a view to implementing cross-regional measures in 2018.

Maximum limits on cash transactions already exist in most European countries, and the general trend is downward. Last year, Spain joined France in placing a €1,000 maximum on cash payments. Greece went one better, dropping its cap for cash transactions from €1,500 to €500. In simple terms, any legalpurchase of a good or service over €500 will need to be done with plastic or mobile money.

In some countries, the maximum cash limit is significantly higher. For example, in Europe’s biggest economy, Germany, recent attempts by the government to set a threshold of €5,000 triggered a fierce public backlash. The German tabloid Bild published a scathing open letter titled “Hands Off Our Cash,” while a broad spectrum of political parties condemned the proposed measures as an attack on data protection and privacy.

“Cash allows us to remain anonymous during day-to-day transactions. In a constitutional democracy, that is a freedom that has to be defended,” tweeted the Green MP Konstantin von Notz. Even Bunderbank President Jens Weidmann criticized the government’s proposals, telling Bild (emphasis added): “It would be fatal if citizens got the impression that cash is being gradually taken away from them.”

Germany’s neighbor to the south, Austria, has similar reservations about the EU’s plans to suppress cash. The Deputy Economy Minister Harald Mahrer said that Austrians should have the constitutional right to protect their privacy.

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

The Contagion Begins

June 25, 2016

The Contagion Begins

Brussels will try to now punish Britain as they punished the Greeks for daring to vote against them. Our sources are already saying the attitude behind the curtain is turning nasty as in how dare those “limies” vote to leave. The derogatory remains off camera are telling. Brussels will try to be hard on the Brits because there are already movements to enter referendums to leave the EU surfacing in the Netherlands, France and the Northern League in Italy. Indeed, the Brits just slapped the face of those elitists in Brussels who refuse to see they are ever wrong. It is always everyone else’ fault. The entire EU project has gone way too far. It is no longer about trade – it is an autocratic anti-democratic establishment hell bent on federalizing Europe.

Brexit: The System Cannot Hold

June 24, 2016

Brexit: The System Cannot Hold

Stephen Green 18×24 inches. 2016. Acrylic on canvas. MuseumofAwesomeArt.com

Well, they did it. A majority of Britons made clear they’re so fed up with David Cameron and everything he says or does, including promoting the EU, that they voted against that EU. They detest Cameron much more than they like Nigel Farage or Boris Johnson. It seems that everyone has underestimated that.

Cameron just announced he’s stepping down. And that points to a very large hole in the ground somewhere in London town. Because going through a list of potential leaders, you get the strong impression there are none left. Not to run the country, and not to negotiate anything with Brussels. Which has a deep leadership -credibility- hole of itself, even though the incumbents are completely blind to that.

But first Britain. The Leave victory was as much a vote against Chancellor George Osborne as it was against Cameron. So Osborne is out as potential leader of the Conservatives. Boris Johnson? Not nearly enough people like him, and he fumbled his side of the Leave campaign so badly his credibility, though perhaps not being fully shot, is far too much of an uncertainty for the Tories to enter the upcoming inevitable general elections with.

Who else is there? Michael Gove? Absolute suicide. Likeability factor of zero Kelvin. That bus these guys drove around which proclaimed they could get £350 million extra a year for the NHS health care system in case of a Brexit will come back to haunt all of them. Just about the first thing Farage said earlier when the win became clear, was that the £350 million was a mistake.

I guess you could mention Theresa May, who apparently wants the post, but she’s an integral part of the Cameron clique and can’t be presented as the fresh start the party so badly needs.

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

Brexit: Wrong Discussion, Wrong People, Wrong Arguments

May 29, 2016

Brexit: Wrong Discussion, Wrong People, Wrong Arguments

G.G. Bain Immigrants arriving at Ellis Island, New York 1907There’ve been a bunch of issues and topics on my -temporarily non-writing- mind, and politics, though as I’ve often said it’s not my preferred focus, keeps on slipping in. That’s not because I’ve gotten more interested in ‘the game’, but because the game itself is changing in unrecognizable fashion, and that is intricately linked to subjects I find more appealing.For instance, in the past few days, I’ve read Matt Taibbi’s epos on the demise of America’s Republican Party in R.I.P., GOP: How Trump Is Killing the Republican Party, and Shaun King on a similar demise of the Democrats in Why I’m Leaving the Democratic Party After This Presidential Election and You Should Too, and both make a lot of sense.

But I think both also miss out on the main reason why these ‘demises’ are happening. In my view, it’s not enough, not satisfactory, to talk about disgruntled voters and corrupt politicians and the antics of Donaldo, and leave it at that. There is something bigger, much bigger, going on that drives these events.

But that I will explain in a later article (soon!). Right now, I want to address another piece of the same pie (though it’s perhaps not obvious that it is): the Brexit ‘discussion’ in Europe. A May 11 piece by ex-World Banker Peter Koenig provides as good a starting point as any:

The Collapse of the European Union: Return to National Sovereignty and to Happy Europeans?

Imagine – the EU were to collapse tomorrow – or any day soon for that matter. Europeans would dance in the streets. The EU has become a sheer pothole of fear and terror: Economic sanctions – punishment, mounting militarization, the abolition of civil rights for most Europeans.

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

Dutch Voters Reject Ukraine Deal

April 7, 2016

Dutch Voters Reject Ukraine Deal

Dutch voters struck a blow against the E.U.’s Ukrainian association agreement – and the incessant Russia-bashing that has surrounded it – creating hope for less belligerence in Europe, writes Gilbert Doctorow.

On this overcast Thursday morning in Brussels, the political capital of Europe, rays of bright sunshine are breaking through from the east as the latest results of vote counting in neighboring Netherlands suggest that Wednesday’s referendum against the European Union’s Association Agreement with Ukraine won two out of every three votes and passed the 30 percent participation requirement of all eligible voters to be considered valid.

If those results are confirmed by the official results – to be released on April 12 – this referendum marks a resounding defeat for the Brussels-led conspiracy to pursue Russia-bashing policies of sanctions and information warfare without consulting public opinion at home.

Dutch Prime Minister Mark Rutte

To change metaphors and speak in terms of Dutch folklore, it is the first crack in the dam that many of us have been waiting for, the opportunity for common sense to prevail over the illogic, hubris and plain pigheadedness of those who control the E.U. institutions in Brussels, and afar from Berlin and Washington.

While the referendum was formally just “advisory,” both the public statements of parliamentarians and the acknowledgements of the Dutch government ahead of the voting indicated that it will force a new vote in parliament on ratification and likely send Prime Minister Mark Rutte to Brussels. hat in hand, requesting a renegotiation of the Association Agreement.

As such, it may bring the E.U. foreign policy machinery to a shuddering halt and open the illogic of all its policies towards its eastern borderlands over the past several years to public scrutiny and, possibly, to revision.

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

The End of Europe (As We Know It)?

March 30, 2016

THE END OF EUROPE (AS WE KNOW IT)?

As the Eurozone is amid secular stagnation, its old fiscal, monetary and banking challenges are escalating, along with new threats, including the Brexit, demise of Schengen, anti-EU opposition and geopolitical friction. According to Dan Steinbock, Brussels can no longer avoid hard political decisions for or against an integrated Europe, with or without the euro.

Since 2010, European leaders have been deferring the hard decisions. Occasionally, there have been political reasons for delays. Yet, times of crises cry for leadership.

Economically, procrastination has sustained the semblance of continuity in the short- term. Politically, it has maintained the status quo of “integration without common institutions”, which is unsustainable. Strategically, it has resulted in misguided military policies that threaten to undermine what is left of the unity of the region.

Time is out and delays are no longer an option.

From cyclical contraction to secular stagnation

The numbers are not encouraging. While the Eurozone (EZ) is amid a fragile cyclical rebound, it is barely breathing as quarterly real GDP growth is at barely 0.3% and inflation close to zero. After half a decade of economic pain, the region will struggle for 1.5% growth. In the coming decade, that will slow close to 1%.

When the global financial crisis hit Europe its core economies – Germany, France, the UK and Italy – relied on relatively generous social models for cushion, but structural challenges were deferred. In spring 2010, the European sovereign debt crisis was still seen as a liquidity issue and a banking crisis. As Brussels launched its €770 billion “shock and awe” rescue package, it was expected to stabilise the EZ.

However, Brussels and the core economies failed to provide adequate fiscal adjustment, which made mass unemployment a lot worse and continues to penalise confidence, demand and investment.

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

A European PATRIOT Act Will Not Keep People Safe

March 28, 2016

A European PATRIOT Act Will Not Keep People Safe

It was not long after last week’s horrifying bombings in Brussels that the so-called security experts were out warning that Europeans must give up more of their liberty so government can keep them secure from terrorism. I guess people are not supposed to notice that every terrorist attack represents a major government failure and that rewarding failure with more of the same policies only invites more failure.

I am sure a frightened population will find government promises of perfect security attractive and may be willing to allow more surveillance of their personal lives. They should pause a little beforehand and consider what their governments have done so far to keep them “safe.”

The government of France, for example, has been particularly aggressive in its Middle East policy. Then-French President Sarkozy was among the most determined proponents of “regime change” in Libya. That operation has left the country in chaos, with much of the territory controlled by an ISIS and al-Qaeda that were not there before the “liberation.” As we learned last week from Hillary Clinton’s emails, Sarkozy and British Prime Minister David Cameron were much more concerned with getting their hands on Libya’s oil after the overthrow of Gaddafi. The creation of a hotbed of terrorism that could easily make its way to Europe was not important. They wanted to secure enormously profitable deals for well-connected French and English energy companies.

Likewise, European governments have been very active in the five-year, US-led effort to overthrow the Assad government in Syria. This foolish move has boosted both ISIS and al-Qaeda in Syria to the point where they nearly over-ran the country late last year. It has also led millions to flee their war-torn country for a Europe that has opened its doors with the promise of generous benefits to anyone who can make it there.

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

BREXIT Reality or a Manipulated Outcome?

February 24, 2016

BREXIT Reality or a Manipulated Outcome?

COMMENT: Dear Martin,

London 23rd Feb, it is very sad, I cannot find one main stream news outlet that is backing a Brexit. They are all preaching fear, even Boris is not campaigning hard (yet only I hope) and the BBC which is meant to be unbiased is clearly Pro EU.

Is this the sound of all the irrelevant politicians, newsstands, unelected bureaucrats, top civil servants trying to save their jobs. I really hope the pendulum swing is big enough this time, what is the wait otherwise?

Best Wishes,

ANSWER: I use to live in London in Kensington. It is my favorite city. It pains me deeply to see what is unfolding. I have many friends in London and use to stop by Margaret Thatcher’s home to say hello. Of course, the mainstream press will be backing the politicians who support staying in the EU. They join with the politicians to keep government intact. I am glad Maggie is not here to witness this. Britain receives no benefit from being inside the EU, yet gets all the garbage. This is exactly what Thatcher was against — the political union. Brussels has not been about an economic union; it is about a political union with central power.

Cameron can claim it’s the best of both worlds to stay in the EU, but Brussels demands the surrender of sovereignty behind closed doors. A little more than 15% of all laws in Britain come from Brussels (see: study of London School of Economics). Yes, there are claims attributing that 84% of laws come from Brussels. That comes from a reply by Alfred Hartenbach Parliamentary Undersecretary of the German Parliament given on April 29, 2005, which was limited to Germany. He stated that from 1998 until 2004, some 18,187 EU regulations and 750 EU directives were adopted in Germany whereas the German Parliament passed, in total, only 1,195 laws (as well as 3,055 “Rechtsverordnungen” – which are like Primary and Secondary legislation).

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

Who Gets to Pay for the Italian Banking Crisis?

January 28, 2016

Who Gets to Pay for the Italian Banking Crisis?

The missing Capital Buffer.

Six years after Europe’s sovereign debt crisis began, the Eurozone’s third largest economy, Italy, has finally decided to do what just about every other country has done when facing a full-blown, almost out-of-control banking crisis: to set up a bad bank to hide its worst debt.

It was only a matter of time: in the last six years, Europe’s economies have been drowning in an ever-expanding vitrine of bad debt — and none more so than Italy, where non-performing loans have soared to more than 350 billion euros, a fourfold increase since the end of 2008. At 18%, Italy’s ratio of nonperforming loans is more than four times the European average (and Europe’s banks are in worse shape than America’s). It’s the equivalent of 21% of GDP in a country that boasts Europe’s second highest public debt-to-GDP ratio (130%), just behind Greece, and where the banks hold over 70% of the country’s debt.

To make matters even worse, if Brussels gets its way, Italy’s government will not be able to dip into future taxpayer funds to stop its debt-laden banks from dropping like flies. European law no longer allows that sort of thing. Well, not really. Now, in the wake of new regulations that came into effect at the beginning of this year, collapsing banks in Europe will be “resolved” with the funds of stockholders, bondholders and other investors, including account holders with deposits of more than €100,000 euros — instead of classic bailouts that would raid directly or indirectly the taxpayers of other countries.

It might even make bank creditors realize that investing in a bank is not a risk-free venture.

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

Belgian nuclear plant’s reactor shuts down days after reboot

January 3, 2016

Belgian nuclear plant’s reactor shuts down days after reboot

Belgium’s Doel nuclear reactor went offline on Saturday, after it was restarted just three days ago, the plant’s spokesperson said. Meanwhile, Germany has stepped up criticism on operational safety of its neighbor’s aging nuclear facilities.

Doel 1 nuclear reactor, located in northern Belgium, was taken offline automatically, RTL broadcaster quoted the communications manager Els De Clercq as saying.

At this point there is no safety risk, AFP reported, citing power utility company Electrabel, which operates the plant.

“Doel 1 automatically shut down at 6:00 pm,” AFP reported a spokeswoman for Electrabel as saying. “Everything went according to procedure. There was no impact on safety, and no impact on staff, local residents and the environment.”

Electrabel added that the reactor went offline due to “normal safety mechanism,” so it can restart safely.

The Doel 1 reactor was rebooted Wednesday, after getting shut down in February, as the country tried to cut its reliance on nuclear power.

Belgium decided to extend the lives of the aging Doel 1 and Doel 2 reactors until 2025, both of which are 40 years old. Widespread power blackouts was one of the main reason behind the extension.

Meanwhile, Germany, which is also eliminating the use of nuclear power, has been raising red flags over possible environmental consequences, arguing that it is too dangerous to keep the Doel reactors going.

The German government said it is preparing “critical questions” to the Belgian authorities on operational safety at the nation’s two active nuclear power plants. German Environment Minister Barbara Hendricks has demanded Brussels scrap its nuclear energy program altogether.

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

Why Europe Will Collapse: Schultz’s Outrage at Poland

December 16, 2015

Why Europe Will Collapse: Schultz’s Outrage at Poland

A huge protest against the Europe Union has taken place in Poland. When I was there, everyone I spoke to was against joining the euro. They all said that the euro would destroy Poland as it did in Greece and the rest of Southern Europe. European Parliament President Martin Schulz (SPD) has said that the protests in Poland have a “coup-character” because they are realistic and against the policies of Brussels, whom refuses to review or admit that the euro has been a complete disaster for Europe as a whole.

Poland has responded with indignation, making it clear that the people have a democratic right and have acted within the rule of law. Prime Minister Beata Szydlo demanded on Monday for an apology from Schulz for his statement. But Luxemburg’s Foreign Minister Jean Asselborn warned on behalf of the EU presidency that independence of the judiciary and the media in Poland is threatened. Indeed, the threat to any democratic right comes from Brussels.

Schulz said on German radio that “right-wing populists” are the greatest threat when they argue against his policies and take government into their own hands to accuse external forces to interfere in the internal politics of their country. These comments from Schultz are dictatorial in nature, as they say that anyone who disagrees with the federalization of Europe going into the hands of Brussels is a threat. A threat to what — freedom? There is no hope of trying to reason in Brussels. This is beyond hope. We must crash and burn until the end for they will NEVER admit the slightest error in their ideas.

The Eurozone’s Minsky Conundrum

November 13, 2015

The Eurozone’s Minsky Conundrum

BRUSSELS – Stubbornly low inflation has the European Central Bank worried. But its response – essentially just more quantitative easing – could backfire, exacerbating imbalances and generating serious financial instability.

As it stands, the headline consumer price index in the eurozone hovers around zero, and even core inflation remains below 1% – too far for comfort from the ECB’s target of around 2%. While a new round of weakness in global commodity prices earlier this year contributed to these figures, it does not explain the weakness in longer-term inflation expectations, which have improved little since March, when the ECB started its massive €60 billion ($66.3 billion) per month bond-buying program.

But instead of rethinking its strategy, the ECB is considering doubling down: buying even more bonds and lowering its benchmark interest rate even further into negative territory. This would be a serious mistake.

Easier credit conditions and lower interest rates are supposed to boost growth by stimulating investment and consumption demand. But in the core of the eurozone – countries like Germany and the Netherlands – credit has been plentiful, and interest rates have been close to zero for some time, so there was never much chance that bond purchases would have a significant impact there. And, indeed, the European Commission’s most recent economic forecast shows that spending in the core countries has not increased as a result of the ECB’s policies; Germany’s external surplus is actually increasing.

Of course, in the highly indebted peripheral countries, there was room for interest rates to fall and for credit supply to grow – and they have, leading governments and households to increase their spending. While the asymmetrical impact of the ECB’s policy is appropriate in principle (because unemployment is much higher in the periphery), the reality is that a recovery supported by the least solvent economies is not sustainable.

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

“Social Explosion” Begins In Greece As Massive Street Protests Bring Economy To A Fresh Halt

November 12, 2015

“Social Explosion” Begins In Greece As Massive Street Protests Bring Economy To A Fresh Halt

One thing that became abundantly clear after Alexis Tsipras sold out the Greek referendum “no” back in the summer after a weekend of “mental waterboarding” in Brussels was that the public’s perception of the once “revolutionary” leader would never be the same. And make no mistake, that’s exactly what Berlin, Brussels, and the IMF wanted.

By turning the screws on the Greek banking sector and bringing the country to the brink of ruin, the troika indicated its willingness to “punish” recalcitrant politicians who pursue anti-austerity policies. On the one hand, countries have an obligation to pay back what they owe, but on the other, the subversion of the democratic process by using the purse string to effect political change is a rather disconcerting phenomenon and we expect we’ll see it again with regard to the Socialists in Portugal.

After a month of infighting within Syriza Tsipras did manage to consolidate the party and win a snap election but he’s not the man he was – or at least not outwardly. He’s obligated to still to the draconian terms of the bailout and that means he is a shadow of his former self ideologically. As we’ve said before, that doesn’t bode well for societal stability.

On Thursday, we get the first shot across the social upheaval bow as the same voters who once came out in force to champion Tsipras and Syriza are staging massive protests and walkouts. Here’s Bloomberg:

As Greek workers took to the streets in protest on Thursday, Alexis Tsipras was for the first time on the other side of the divide.

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

Is the Troika About to Lose Control of South-Western Europe?

November 12, 2015

Is the Troika About to Lose Control of South-Western Europe?

The Price of “Austerity”

Passos Coelho, who was until Tuesday Prime Minister of Portugal, knew “what to do.” After signing along the dotted line for a €78 billion bailout he embraced the Troika’s austerity agenda with abandon. Public spending was slashed, taxes were hiked, wages were cut, and a whole gamut of public assets and services were privatized.

As they say in Brussels these days, no pain, no gain. After four years of excruciating belt-tightening, Portugal was apparently back on the mend, despite its public debt almost doubling since 2008. Its economy had been through the grinder but it had come out the other end in much leaner shape. The public deficit had shrunk from 11% in 2011 to 3% today.

Unemployment had also fallen, and kept falling month after month, to the point where it was getting monotonous. Until two months ago, that is, when it shot back up over 14%. Then came the bomb shell: the country’s Ministry of Statistics announced in a rare moment of candor that unemployment, in an “extended sense,” was actually around 22%. As Deutsche Welle reports, the Portuguese government had been doctoring the figures to keep the European institutions (i.e. the Troika) happy:

European politicians prefer lower unemployment figures rather than higher ones, and as a consequence, there are now unemployment figures in “narrower” and “extended” senses. Mostly, the headline figures reported are the lower, “narrower” ones.

Flimsy Façade

In other words, in the real world Portugal has almost identical depression-era levels of unemployment as Spain. Its government is just more skilled at masking the grimness of its economic reality.

However, hiding a decidedly grim reality with a flimsy façade of doctored numbers may work on international investors and rating agencies – at least for a while – but it doesn’t work on those who have to live in that grim reality. And at election time that can be a serious setback.

When Coelho’s governing coalition received only 38% of the vote in last month’s elections, the game was as good as up, especially when it became clear that three parties on the left — the so-called “triple left” — had won an absolute majority and seemed willing to form a coalition.

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