• Tag Archives EU
  • After Brexit: Germany and the EU Will Look to Asia

    Britain’s general election went horribly wrong, with the Conservatives forced into a putative coalition with the Democratic Ulster Party. Theresa May’s failure to secure a clear majority has provoked indignation, bitterness, and widespread pessimism. The purpose of this article is not to contribute to this outcry, but to take a more measured view of the situation faced by the British government with regards to Brexit, and the consequences for Europe. In the interests of an international readership, this article will only summarise briefly the current situation in the UK before looking at the broader European and geopolitical consequences.
    While it would be wrong to dismiss the precariousness of Mrs. May’s position, there are some positive factors, which are being generally ignored. Most importantly, Brexit negotiations are due to start next week. These negotiations matter more than anything else on the government’s agenda, so are a unifying force. Mrs. May recognises this, which is why she has brought Michael Gove back into the cabinet (as Environment Secretary), and Steve Baker as a minister in the Brexit ministry. Gove is a committed Brexiteer with a track record as a capable minister, and Baker was the motivating influence behind the parliamentary campaign for Brexit.
    All ambitions to replace Mrs May are being put to one side in favour of Brexit. This message of unity has been endorsed by Conservative MPs. They will be regularly updated with developments in future, to keep them onside. There are already signs that the government is reaching out to the opposition as well. This has been read as a separate negotiation, potentially leading to a softer Brexit. While it is dangerous to prejudge the outcome, this is probably incorrect: the purpose is more likely to keep the Labour Party leadership fully briefed on both progress and the rationale behind negotiation tactics.

    This post was published at Ludwig von Mises Institute on June 20, 2017.

  • “Clear As Mud” Brexit Negotiations Officially Begin: Here’s What To Expect

    Today Britain and the EU officially begin the first day of formal Brexit negotiations, “aiming for a constructive, orderly launch that avoids a noisy clash on the big policy differences over Britain’s exit”, according to the FT although the sellside reaction was decidedly less optimistic, as summarized by SocGen’s Kit Juckes who in previewing today’s events said that he expects “nothing because the UK position is as clear as mud’ beyond growing signs that the UK wants free trade without being part of the customs union or conceding grounds on borer controls.”
    To be sure, no breakthroughs are expected on Monday, or indeed for some weeks and possibly months to come. The idea is for the EU and UK sides to meet, exchange views, plan practicalities and set agendas, all ahead of more detailed talks in coming weeks. ‘This is about building trust, nothing more,’ said one senior EU diplomat quoted by the FT.
    Looking at today’s main political event, DB’s Jim Reid writes that the Chancellor of the Exchequer Phillip Hammond suggested yesterday in a TV interview that a gentle departure from the EU should be targeted. The Chancellor indicated that ‘transactional structures’ would be needed to help smooth the process and that ‘we need to get there via a slope, not via a cliff edge’ – suggesting a softer tone in negotiations. In contrast to the PM, Hammond also rejected the mantra ‘no deal is better than a bad deal’. Hammond also said that his position was one of a ‘jobs first’ Brexit which is also a slight shift in tone compared to the PM. Separately, Hammond said that the UK government had ‘heard a message last week in the general election’ and that ways to soften austerity were being looked at with voters seemingly growing ‘weary’ of it.

    This post was published at Zero Hedge on Jun 19, 2017.

  • The Next Economic Crisis Is Going To Leave The Majority Of People In Shock – Episode 1307a

    The following video was published by X22Report on Jun 15, 2017
    EU has decided to put Greece further into debt. It is becoming clear that Greece will never get out of this debt hole. 70% of the people support the BREXIT. Canada’s existing home sales has declined rapidly. Bitcoin dropped on worries about cyber attacks and regulations. Nike cutting 1500 people. The US manufacturing industry declines once again. Illinois is worse now than back in the great depression of the 30s. Bloomberg’s Mike Cudmore says the Fed has just pushed us into a recession, what he really means a collapse of the economy. Japan has decided that they will look into joining China’s belt and road trade system. The Fed is now pushing the collapse is not holding back, most of the people are going to be shocked when this hits.

  • Mises-Influenced MP Becomes Brexit Minister

    Steve Baker, a Conservative Member of Parliament, was announced today as junior Brexit minister under fellow libertarian David Davis. Baker, who has referenced Austrian scholars such as Ludwig von Mises, Jess Huerta de Soto and F. A. Hayek in the House of Commons, has long been a Eurosceptic and seen as a ‘hardliner’ in future negotiations with the EU. Along with his opposition to the EU, Baker has been a vocal opponent of the Bank of England’s policy of quantitive easing, and the IMF.
    In his own words:
    I am afraid that the contemporary mainstream of economics is missing some vital information…
    As I explained, as Mises set out, as Hayek followed in his steps and as others have predicted, we risk a final and total catastrophe for our currency system.
    To conclude, we are in danger of simply kicking a can down. … We are looking at further credit expansion, further monetisation of debts and further socialisation of risk. Throughout the western world, we are in danger of appearing as King Canute, trying to use politics to hold back the realities of social co-operation, which we usually describe as economics. The IMF is an institutional legacy from a monetary system that failed 40 years ago, and the successor to which is even now failing as well.

    This post was published at Ludwig von Mises Institute on June 14, 2017.

  • The Next Financial Crisis Has Already Arrived In Europe, And People Are Starting To Freak Out

    Did you know that the sixth largest bank in Spain failed in spectacular fashion just a few days ago? Many are comparing the sudden implosion of Banco Popular to the collapse of Lehman Brothers in 2008, and EU regulators hastily arranged a sale of the failed bank to Santander in order to avoid a full scale financial panic. Sadly, most Americans have no idea that a new financial crisis is starting to play out over in Europe, because most Americans only care about what is going on in America. But we should be paying attention, because the EU is the second largest economy on the entire planet, and the euro is the second most used currency on the entire planet. The U. S. financial system is already teetering on the brink of disaster, and this new financial crisis in Europe could turn out to be enough to push us over the edge.
    If EU regulators had not arranged a ‘forced sale’ of Banco Popular to Santander, we would probably be witnessing panic on a scale that we haven’t seen since 2008 in Europe right about now. The following comes from the Telegraph…
    Spanish banking giant Santander has stepped in to the rescue ailing rival Banco Popular by taking over the failing lender for 1 in a watershed deal masterminded by EU regulators to avoid a damaging collapse.
    Santander will tap its shareholders for 7bn in a rights issue to raise the capital needed to shore-up Popular’s finances in a dramatic private sector rescue of Spain’s sixth-largest lender.
    It will inflict losses of approximately 3.3bn on bond investors and shareholders but crucially will avoid a taxpayer bailout.

    This post was published at The Economic Collapse Blog on June 12th, 2017.

  • A2A with Alasdair Macleod of GoldMoney

    What a terrific and timely Q&A session we had Wednesday with Alasdair Macleod. Very informative and a must listen for everyone.
    Among the topics Alasdair addresses:
    The significance of the UK elections on Thursday. Next week’s FOMC meeting and possible Fed Funds rate hike. Physical demand for gold from China and India. The stability of the EU and the entire EU banking system. Will China soon spark a global, commodity-based inflation? Sharia-compliant gold and the new “Onegram” digital currency. And much, much more!

    This post was published at TF Metals Report on June 8, 2017.

  • Gold in Pounds Surges 1.5% To 1,001/oz – UK Political Turmoil Likely

    – Gold in pounds rises 1.5% from 986/oz to 1,001/oz after shock UK election result
    – Gold reaches 7 week high and surges 6% in the last 30 days from 942/oz to 1,001/oz
    – Very robust gold sales experienced by gold brokers, including GoldCore, in the UK this week and today
    – May’s ruling Conservative party loses overall majority and prospect of hung U. K. parliament
    – PM May vulnerable from within Tory Party and Corbyn has called for her to resign
    – Corbyn and Labour party on the rise which may pose risks to vulnerable London property market and UK economy as investor sentiment towards UK sours further
    – Vote set to boost political turmoil in UK, complicate Brexit talks with EU whose hand is strengthened
    As reported by Bloomberg News this morning:
    Gold priced in sterling surged to the highest level in more than seven weeks as Prime Minister Theresa May failed to win an overall majority in the U. K. election, signaling further political turmoil less than a year after Britain voted to leave the European Union.

    This post was published at Gold Core on June 9, 2017.

  • The OECD predicts Britain will crash out of the E.U. without a trade deal

    U.K. economic growth will slow sharply next year before Britain leaves the E.U. in 2019 without a trade deal, according to the Organisation for Economic Cooperation and Development.
    The influential Paris-based policy group predicts in its latest U.K. forecast that GDP growth will weaken slightly to 1.6% in 2017 then slow dramatically to 1% in 2018.
    The gloomy forecast is driven by the OECD’s assumption that Britain will leave the E.U. without a trade deal and fall back onto restrictive World Trade Organisation (WTO) tariffs, classified as a “most-favoured nation.”
    Economists have warned that that a “cliff-edge” Brexit scenario whereby the U.K. fails to secure a deal would be economically destructive.

    This post was published at Business Insider

  • UK General Election Preview: All You Need To Know

    All you need to know about tomorrow’s general election in the UK, broken down into several parts.
    From RanSquawk, Deutsche Bank, Lloyds, and WSJ
    Why has a Snap Election been called?
    On April 18th PM Theresa May surprised many by calling for a snap election for June 8th . May stated that her reason in doing so was to ‘strengthen her hand in Brexit negotiations’. While at the time that the snap election had being called, the Conservative party had a commanding 20ppt lead in the opinion polls, an opportunity that may not occur again. As such, a result of this size would make it harder for parliament to overthrow any deal May returns with from Brussels, potentially leading to a cleaner Brexit with the risk of a ‘no deal’ lower.
    Polling Intentions
    UK pollsters were originally predicting a landslide for PM May backin April, subsequently leading many to believe that the risk surrounding the election is relatively low, with the Conservative party seen increasing their current majority by some 75-125 seats. However, a notable shift in the polls has been observed since the release of both the Conservatives and Labour parties’ manifestos, moving in favour of the latter. In turn, this has resulted in some modest pullback from 2017 highs in recent weeks and somewhat elevating the risk regarding the election with some polls narrowing the Conservatives lead to as low as 4ppts. However, given the recent performance of UK pollsters over the 2015 election and EU referendum, they could be taken with a pinch of salt.

    This post was published at Zero Hedge on Jun 7, 2017.

  • What Europe’s First Official Bail-In Looks Like

    “If you think this has a happy ending, you haven’t been paying attention,” warns MINT Partners’ Head of Capital Markets Bill Blain, as he reflects on what just happened in Europe (that US equities seem happy to brush off as yet another fleshwound to global instability).
    There is a rule in Financial Institutions that any bank that calls itself ‘popular’ generally isn’t. This was proved last night. But, congratulations if you were a holder of Spain’s Banco Popular’s Senior Debt – they did a Zebedee ‘boing!’ on the basis last night’s last minute Santander rescue makes the bonds money good.
    Bad news for the Equity and COCO AT1 holders – who have the distinction of holding the first major bank capital bonds to be bailed-in/wiped out under EU regulations. Banco Popular senior debt is 12 points higher this morning.
    The AT1 perps are trading at 2.6%, down 50 points!!, and even that price looks optimistic. Ahah. We’ve not seen crashes like that since 2008.
    Popular has been desperately seeking a rescue for the last few weeks, but everyone looked the other way. So last night the ECB triggered the ‘Single Resolution Mechanism’ when it determined the Popular’s liquidity crisis was such its equity would be unable to cover debts or other liabilities.

    This post was published at Zero Hedge on Jun 7, 2017.

  • Deposit Bail In Risk as Spanish Bank’s Stocks Crash

    – Deposit bail in risk as stocks and bonds of Spanish bank – Banco Popular – crash
    – Banco Popular stock crashes most on record – down 63% this year to 34 euro cents
    – Spanish bank tells employees – ‘Don’t panic’
    – Risk of Spanish banking crisis as Banco Popular credit curve inverts
    – Banco Popular needs to find at least 4 billion more capital – analysts
    – Deposits over 100,000 (euro) vulnerable to bail-in
    – EU, U. S., UK push for bank ‘bail-ins’ poses risks to depositors
    Banco Popular’s shares crashed another 17 per cent yesterday to record lows amid concerns the Spanish bank may have to be ‘wound down’ and could see bail-ins of investors and depositors.
    There are increasing fears that there is no buyer for the bank and this saw its share price dropped to 0.34 (34 euro cents). The bank’s stocks had already fallen nearly 50 per cent in the last week and is down 63% this year.

    This post was published at Gold Core on June 6, 2017.

  • Macron – False Hope for Europe

    Those who think that the election of Emmanuel Macron to the Presidency of France is the savior of the Euro probably believe that politicians are really there for the people rather than themselves. Macron’s idea of federalizing Europe some call the ‘transfer-union’ is politically never going to happen. The EU is being torn apart at the seams for centralized government dictating to an economy and regulating everything just does not work. Ask Russia and China.
    Socialism is the same as Communism, with the minor distinction that you formally own your property, but are regulated and taxed so you are still not ‘free’ to do as you like. To a large degree socialism is worse for you have to fill out forms and pretend that your vote will actually change something – when they do not listen anyway.

    This post was published at Armstrong Economics on Jun 4, 2017.

  • Shock Waves Spread from Spain’s New Banking Crisis

    Has the time finally come to test the EU’s bail-in law? ****
    The shares of Spain’s sixth biggest bank, Banco Popular, plunged 36% this week to 0.43, reducing the bank’s market capitalization to 1.7 billion. Just three weeks ago, when there was still a glimmer of hope that things could be turned around, it was worth almost double that. Its shares traded at 15 ten years ago, before the collapse of Spain’s mind-boggling housing bubble that left Popular holding billions of euros of real estate assets.
    Popular may not be a systemically important institution, but it’s nonetheless an institution of great import. It has the largest portfolio of small business customers in Spain and enjoys the patronage of one of Spain’s most influential institutions, Opus Dei. Its well-heeled members are among the bank’s most important shareholders and investors, and they stand to lose a lot of money if a last-minute buyer is not found soon.
    This is an outcome that can no longer be discounted, especially after reports emerged on Thursday that senior officials of the ECB’s regulatory arm, the Single Supervisory Mechanism, had warned the bank could be wound down if it fails to find a buyer. But the EU agency charged with overseeing bank failures later issued a statement saying it ‘never issues warnings about banks.’

    This post was published at Wolf Street on Jun 3, 2017.

  • Monte Paschi Wins E.U. Backing on Revamp, Paving Way to Rescue

    European Union and Italian officials agreed on a plan to restructure Banca Monte dei Paschi di Siena SpA, allowing Italy to inject capital to rescue the world’s oldest bank.
    Competition Commissioner Margrethe Vestager and Italian Finance Minister Pier Carlo Padoan reached ‘an agreement in principle’ on a deal that paves the way for a precautionary recapitalization of the lender, according to a statement on Thursday. The deal, following ‘intensive’ talks between Italy, the E.U. and the ECB, still requires formal approval.
    Monte Paschi was forced to turn to Italy for aid after it failed to raise extra capital from investors in December. The European Central Bank said then it needed to secure 8.8 billion ($9.9 billion) to bolster its balance sheet. The government would contribute about 6.6 billion euros, according to a Bank of Italy calculation, with the rest covered by creditors.
    ‘This is a crucial agreement that marks a turning point for the bank granting its survival,’ said Mario Russo, an analyst at North Square Blue Oak Ltd. ‘The decision to bring forward the deal may allow the bank to revamp and return to profit and it’s also a positive signal for the country’s banking sector.’

    This post was published at bloomberg

  • Seven Theories Explaining The Recent Dramatic Surge In The Yuan

    Back in 2015, when the US Dollar started its striking ascent as the world began repricing the Fed’s upcoming tightening, China – whose currency is pegged to the dollar – had no choice but to gradually, or not so gradually, unpeg the Yuan from the world’s best performing currency as otherwise its exports to the rest of the world would plunge. In fact, it was precisely China’s tumbling exports (coupled with ongoing import weakness by the EU) which prompted us to correctly predict that China would devalue its currency, just days ahead of Beijing’s stunning announcement.
    As we said on August 8, 2015, “as global trade continues to disintegrate, and as a desperate China finally joins the global currency war, it will have no choice but to devalue next.”
    That’s precisely what it did.
    Now, nearly two years later, China – in addition to a host of other problems – is facing the opposite issue: a dollar, to which it remains pegged, that has been rapidly declining in value, and is now not only at the lowest level since last October, the DXY is almost exactly where it was when China devalued in the summer of 2015. This may explain the surprpsing spike in Chinese currency volatility in recent days, coming after a period of unexpected calm and stability in the Yuan market. While the catalyst may have been last week’s Moody’s downgrade of China’s credit rating, followed by China’s decision to once again change its Yuan-fixing mechanism, introducing a “counter-cyclical factor”, or a mechanism allowing the PBOC to largely adjust the Yuan rate at will, the surge in the yuan against the dollar has been nothing short of breathtaking, and as we noted earlier today, the Chinese currency just had its biggest 4-day rally against the greenback in 12 years.

    This post was published at Zero Hedge on Jun 1, 2017.

  • The Economy Is Imploding So Quickly That It’s Time To Think About Preparing – Episode 1295a

    The following video was published by X22Report on Jun 1, 2017
    ADP employment surges despite Challenger reporting a 71% jump in job cuts. Radio Shack, Michael Kors and many other retailers are closing a vast amount of stores. One bank make a forecast and says that a quarter of the malls will close. More stores are slated to close, this is the retail apocalypse. GM reports that their inventories are at the level right before the 2008 crisis. Ford reports fleet sales are down by 15%. US construction spending is down & manufacturing is down. Many of the economic indicators are reporting that we are head towards a major collapse. Soros admit the EU is trouble and the Trump administration is hostile.

  • Soros: The European Union Is Now In An “Existential Crisis” And Trump’s America Is A “Hostile Power”

    Commenting on the current state of the European experiment, George Soros warned the European Union has plunged it into an existential crisis as a result of “dysfunctional” institutions and austerity mandates, and will require the bloc to reinvent itself to survive. Speaking at the Brussels Economic Forum, the billionaire investor said the EU had “lost its momentum” as he urged policymakers to abandon hopes of “ever closer union” driven by a top-down approach from Brussels, a statement which will likely displease Germany.
    “The European Union is now in an existential crisis,” Soros told a Brussels audience. “Most Europeans of my generation were supporters of further integration. Subsequent generations came to regard the EU as an enemy that deprives them of a secure and promising future.”
    Just a day after Brussels published a paper mapping out its vision of eurozone integration, Mr Soros warned that the single currency area had become “the exact opposite of what was originally intended” according to the Telegraph.
    Quoted by CNBC, Soros said Europe’s “reinvention would have to revive the support that the European Union used to enjoy.” The reinvention would have to review past mistakes and explain what went wrong, and make proposals to make things right.

    This post was published at Zero Hedge on Jun 1, 2017.

  • The ECB and the Fed: Divergent Paths to Doom?

    Americans tend to focus on the Federal Reserve, but often forget the US central bank isn’t the only game in town.
    While Yellen and company hint they will try to continue pushing interest rates up, European Central Bank president Mario Draghi told European Parliament’s Economic and Monetary Affairs committee he intends to push ahead with his interventionist monetary policy. That means continued negative interest rates and quantitative easing for the EU.
    So, are the world’s two largest central banks taking divergent paths to doom?
    During Monday’s meeting, Draghi stressed the European bloc still needs ‘an extraordinary amount of monetary support’ in spite of its growing economic recovery. The ECB president said he’s’firmly convinced’ the bank should continue ‘support measures,’ including 60 billion of monthly bond purchases.
    Overall, we remain firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary for the present level of underutilized resources to be re-absorbed and for inflation to return to and durably stabilize around levels close to 2pc within a meaningful medium-term horizon.’

    This post was published at Schiffgold on MAY 30, 2017.

  • Visualizing The Possible City Of London ‘Brexodus’

    The EU in Brussels has now given official powers to its top Brexit negotiator, but former French diplomat Michel Barnier is not expected to begin talks until after the UK general election in June. As Statista’s Dyfed Loesche notes, Banks and financial institutions are already preparing for the world after Brexit and planning to pull some of their staff from the finance hub in the City of London…

    This post was published at Zero Hedge on May 29, 2017.

  • Eurasian Economic Transformation Goes Forward — F. William Engdahl

    At this juncture it’s clear that the attempt of the Trump Administration and related circles in the U.S. military industrial complex have failed in their prime objective, that of driving a permanent wedge between Russia and China, the two great Eurasian powers capable of peacefully ending the Sole Superpower hegemony of the United States. Some recent examples of seemingly small steps with enormous future economic and geopolitical potential between Russia and China underscore this fact. The Project of the Century, as we can now call the China One Belt One Road infrastructure development – the economic integration on a consensual basis by the nations of Eurasia, outside the domination of NATO countries of the USA and E.U. – is proceeding at an interesting pace in unexpected areas.
    1971: America’s Twilight Begins
    It’s very essential in my view to appreciate where the post-1944 development of America’s role in the world went seriously wrong. The grandiose project dubbed by Henry Luce in 1941 as the American Century, if I were to pick a date, began its twilight on August 15, 1971.
    That was the point in time a 44-year-old Under-Secretary of the Treasury for International Monetary Affairs named Paul Volcker convinced a clueless President Richard Milhous Nixon that the treaty obligations of the 1944 Bretton Woods Treaty on a postwar Gold Exchange Standard should be simply ignored. Volcker rejected the express mandate of the Bretton Woods Treaty which would have seen a devaluation of the dollar in order to rebalance world major currencies. By 1971 the economies of war-ravaged countries such as Japan, Germany and France had rebuilt at a significantly higher level of efficiency than the U.S.
    A devaluation of the dollar would have given a major boost to U.S. industrial exports and eased the export of dollar inflation in the world arising from Lyndon Johnson’s huge Vietnam War budget deficits. The de-industrialization of the USA could have thereby been avoided. Wall Street would hear none of that. Their mantra in effect was, ‘Nothin’ personal, just bizness…’ The banks began the destruction of the American industrial base in favor of cheap labor and ultra-high-profit manufacture abroad.
    Instead of correcting that at a point it could have had an enormously positive economic effect, Volcker advised Nixon to in effect spit on America’s international treaty obligations and to brazenly dare the world to do something about it. On Volcker’s advice, Nixon simply ripped the treaty in shreds and ended Federal Reserve redemption of dollars held by foreign central banks for U.S. gold reserves. The U.S. dollar overnight was no longer ‘as good as gold.’

    This post was published at New Eastern Outlook