• Tag Archives Italy
  • ECB Worried Who Will Buy Government Debt if they Stop?

    According to RELIABLE sources behind the curtain, the crisis in Spain led to a significant amount of selling Spanish debt to the European Central Bank (ECB) which has meanwhile swelled to 2.3 trillion Euro. There are problems now emerging in Italy and the appetite for government debt at low rates is not as strong as being portrayed. The ECB’s expansive economic stimulus package of buying government debt is NOT going to be stopped so easily. At the next ECB meeting on October 26th, the bond-buying program is most likely going to continue and at best they might claim to extend the bond purchase program with a modest reduction in volume. The ECB has not commented on this position, but there are rising concerns that member states will be unable to fund their spending without the ECB or a dramatic rise in interest rates demanded from the private sector.

    This post was published at Armstrong Economics on Oct 18, 2017.


  • Theresa May’s Government Fears Imminent Collapse Of Brexit Negotiations

    Following Theresa May’s dinner with Jean-Claude Juncker in Brussels, we have a promise that both sides are committed to accelerating Brexit negotiations…except nobody actually believes that.
    Apart from the ‘bear hug’ that Juncker gave Britain’s Brexit Secretary, David Davis, as they went their separate ways, there is no evidence that relations are any more cordial, or that any tangible progress was made in breaking the deadlock.
    Rather than no progress, however, Bloomberg is reporting that the UK government sees the potential for the negotiations to collapse after this week’s EU Summit. ‘U. K. Prime Minister Theresa May’s government fears Brexit talks will break down unless the European Union gives ground at a key summit this week, according to a person familiar with her team’s views. Without a clear sign that negotiations will progress to trade and transition arrangements by December at Thursday’s summit of EU leaders, the entire Brexit process will be in danger of collapse.’
    Mrs May made a telephone call on Sunday to the one person, Merkel, who could have softened the EU’s stance ahead of the dinner. Consequently, we were not surprised to learn that now ‘senior British ministers are losing faith in the EU’s willingness to strike a deal, the person said.’
    As we’ve said before, it still boils down to money and the EU is not shifting until the two sides can agree on a number.
    The growing problem for Mrs May is that she now has little room to maneuver due to the weakness of her own position. The source in Mrs May’s team told Bloomberg ‘May took a political risk by promising to pay into the EU budget and settle the divorce bill in a speech in Florence, Italy, last month and now needs something in return for before she can make concessions.’

    This post was published at Zero Hedge on Oct 17, 2017.


  • Neck and Neck: Russian and Chinese Official Gold Reserves

    Official gold reserve updates from the Russian and Chinese central banks are probably one of the more closely watched metrics in the gold world. After the US, Germany, Italy and France, the sovereign gold holdings of China and Russia are the world’s 5th and 6th largest. And with the gold reserves ‘official figures’ of the US, Germany, Italy and France being essentially static, the only numbers worth watching are those of China and Russia.
    The Russian Federation’s central bank, the Bank of Russia, releases data on its official gold holdings in the Bank’s monthly ‘International Reserves and Foreign Currency Liquidity’ report which is published towards the end of the third week of each month, and which confirms gold reserve changes as of the previous month-end.
    The Chinese State releases data on its official gold holdings via a monthly ‘Official Reserve Assets’ report published by the State Administration of Foreign Reserves (SAFE) that is uploaded within the Forex Reserves pages of the SAFE website. This gold is classified as held by the Chinese central bank, the People’s Bank of China (PBoC). The SAFE report is published during the 2nd week of each month, reporting on the previous month-end.
    In both reports, official gold reserves (i.e. monetary gold) are specified in both US Dollars and fine troy ounces. Monetary gold is gold that is held by a central bank or other monetary authority as a reserve asset on a central bank’s balance sheet.

    This post was published at Bullion Star on 16 Oct 2017.


  • Italy’s Parallel Fiscal Currency: All You Need To Know

    There is an increased talk in Italy about fiscal money as an instrument to resolve the economic crisis, which is not over yet.
    ***
    Despite the optimism shown by the Italian government and the EU, the Eurozone economy is far from being in an acceptable condition, and this applies in particular for Italy.
    In 2017 Italy’s real GDP will grow by 1.5% compared to the previous year, which is 6% less than what it was in 2007, ten years earlier! Within the same period unemployment has doubled, the number of people in poverty tripled from 1.5 million to almost 5, and this trend does not seem to be reversing. The Italian economic system is working far below its potential: this gap has been created first by the global financial crisis of 2008 and then by the austerity policies ‘prescribed’ by the EU in 2011. Italy can solve this problem by introducing an adequate quantity of purchasing power in its economic system. It can’t do it by issuing euros, nor (due to the mechanisms of the Eurozone) by increasing the state deficits.

    This post was published at Zero Hedge on Oct 16, 2017.


  • Italy’s Solution for Unemployment = Pension Crisis

    The high taxation in Europe has crippled the economy. Those in power have not yet figured out that 70% of employment is created by the small business owner who they consider the rich and thus the enemy. Nowhere has this been more the case in Italy, Greece, and Spain. Italy is the next on the list of this Year From Political Hell come May 2018 and with youth unemployment above 30% for the past six years, the solution is not to lower taxes, but to steal from pensions to pay benefits to the youth.
    In 2015 alone, some 50,000 Italians under 40 years of age migrated elsewhere to find jobs. Nearly half of them had gone to university to get degrees to no avail. All the fancy papers to frame and hang on the wall are not worth the cost of a frame. Italy and Greece are bleeding as their young talent cannot find a job and are pouring out of the country. The loss of these people is being argued is costing Italy 1% per year in economic growth. The estimate is closer to a 2% loss on GDO for Greece.

    This post was published at Armstrong Economics on Oct 16, 2017.


  • Germans Have Quietly Become the World’s Biggest Buyers of Gold

    When I talk about Indians’ well-known affinity for gold, I tend to focus on Diwali and the wedding season late in the year. Giving gifts of beautiful gold jewelry during these festivals is considered auspicious in India, and historically we’ve been able to count on prices being supported by increased demand.
    Another holiday that triggers gold’s Love Trade is Dussehra, which fell on September 30 this year. Thanks to Dussehra, India’s gold imports rose an incredible 31 percent in September compared to the same month last year, according to GFMS data. The country brought in 48 metric tons, equivalent to $2 billion at today’s prices.
    As I’ve shared with you many times before, Indians have long valued gold not only for its beauty and durability but also as financial security. Indian households have the largest private gold holdings in the world, standing at an estimated 24,000 metric tons. That figure surpasses the combined official gold reserves of the United States, Germany, Italy, France, China and Russia.
    A New Global Leader in Gold Investing?
    But as attracted to gold as Indians are, they weren’t the world’s biggest investors in the yellow metal last year, and neither were the Chinese. According to a new report from theWorld Gold Council (WGC), that title shifted hands to Germany in 2016, with investors there ploughing as much as $8 billion into gold coins, bars and exchange-traded commodities (ETCs). This set a new annual record for the European country.

    This post was published at GoldSeek on Thursday, 12 October 2017.


  • Auto OEMs Plan To Flood Market With New Electric Car Models Despite Massive Losses

    Last month we noted that Tesla really outdid itself in 2Q 2017 by posting a record cash burn of $1.2 billion, or roughly $13 million every single day. Per the chart below, Tesla’s Q2 cash burn was just a continuation of the company’s money-losing trend that goes back at least 6 years and seems to be getting worse with each passing quarter.
    But Tesla isn’t alone in burning cash on “EV’s” as pretty much every electric vehicle offered to customers loses money on a per unit basis.
    At this point, expensive battery technology still makes them money drains. General Motors Co. loses about $9,000 on every Chevrolet Bolt electric car it sells. Tesla had record sales of its EVs last year — and still lost $675 million on $7 billion in sales. Fiat Chrysler Automobiles NV loses $20,000 on every electric version of its 500-model subcompact sold in the U. S., Chief Executive Officer Sergio Marchionne said in a speech in Italy on Monday. Battery-powered models should be marketed based on consumer demand and not depend on incentives, he said.
    Of course, with statistics like that, it should come as no surprise that auto OEM’s all around the world are tripping over themselves to introduce dozens of new electric models in the coming years. Even Bloomberg was somewhat perplexed to report that OEMs will introduce 50 new electric vehicle models over the next 5 years despite the industry’s staggering cash burn.

    This post was published at Zero Hedge on Oct 2, 2017.


  • 8 Reasons Why Bill Blain Is Suddenly Very Worried About Germany

    Blain’s Morning Porridge EXTRA: ‘WHAT ABOUT THE GERMANS’
    It’s unusual for me to write a follow up to the Morning Porridge – but following some conversations and reading about the end of ‘Peak Merkel’, I fear I’ve considerably underestimated the risks raised by the inconclusive German Election.
    We are now facing a period of intense political bargaining, weak government and even the potential of a second German vote.
    As a result, the prospects for more volatile European peripheral markets, particularly Greece and Italy, are likely to be exacerbated, and we might well see some of the currency and European stock market froth blow away in coming days as the scale of the ‘German Problem’ becomes clearer.
    My worst case Germany scenario is a second election early next year, political uncertainty as Mutti Merkel finds herself squeezed out, and a scramble to build a new coalition government in her aftermath. The best case scenario isn’t much better: that Merkel manages to forge a new coalition, but it will be a long drawn out affair and the resulting administration will be vulnerable, weak and fraxious.

    This post was published at Zero Hedge on Sep 25, 2017.


  • The forthcoming global crisis

    The global economy is now in an expansionary phase, with bank credit being increasingly available for non-financial borrowers. This is always the prelude to the crisis phase of the credit cycle. Most national economies are directly boosted by China, the important exception being America. This is confirmed by dollar weakness, which is expected to continue. The likely trigger for the crisis will be from the Eurozone, where the shift in monetary policy and the collapse in bond prices will be greatest. Importantly, we can put a tentative date on the crisis phase in the middle to second half of 2018, or early 2019 at the latest.
    Introduction
    Ever since the last credit crisis in 2007/8, the next crisis has been anticipated by investors. First, it was the inflationary consequences of zero interest rates and quantitative easing, morphing into negative rates in the Eurozone and Japan. Extreme monetary policies surely indicated an economic and financial crisis was just waiting to happen. Then the Eurozone started a series of crises, the first of several Greek ones, the Cyprus bail-in, then Spain, Portugal and Italy. Any of these could have collapsed the world’s financial order.

    This post was published at GoldMoney on September 21, 2017.


  • Hillary Almost Proposed ‘A Universal Basic Income’ In 2016, And The Idea Is Catching Fire Among Grassroots Democrats

    Should you get free money from the U. S. government every month simply for being alive? That may sound like a crazy idea to many of us, but the truth is that this will likely be one of the biggest political issues in the 2020 presidential election. At this point, 40 percent of all Americans already ‘prefer socialism to capitalism’, and the concept of a ‘universal basic income’ is starting to catch fire among grassroots Democrats. Many liberals are convinced that the time has come to fight for the right to ‘a minimum standard of living’, and one study by a ‘left-leaning’ group found that giving every adult in the country $1,000 each month would increase the size of the U. S. economy by more than 2 trillion dollars…
    Giving every adult in the United States a $1,000 cash handout per month would grow the economy by $2.5 trillion by 2025, according to a new study on universal basic income.
    The report was released in August by the left-leaning Roosevelt Institute. Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy co-authored the study.
    What an incredible idea, eh?
    All we have to do is give out free stuff and the economy grows like magic. And the study also discovered that the larger the universal basic income is, the more the economy would grow.
    So why not make it $10,000 a month for everyone?
    Well, it turns out that there is a catch. According to the study, the economy only grows if the universal basic income is funded by deficit spending. If we have to raise taxes to pay for it, there is no positive benefit to the economy at all…

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


  • Gold-Backed ETF Holdings Surge in August Signaling Strong Demand for Gold

    Gold flowed into gold-backed exchange-traded funds in August, signalling robust demand for the yellow metal.
    According to the World Gold Council, gold-backed ETF holdings increase by 31.4 tons in August to 2,295 in total global gold holdings.
    Gold ETFs account for a significant part of the gold market. ETF holdings are on par with the foreign reserve gold holdings of France and Italy.
    North America led inflows in August. Investors added 27.8 tons of gold through funds listed in the region. That represents a dollar increase of $1.3 billion.
    Funds based in Europe also saw a net increase, taking in 6.4 tons, or $322 million last month. Asian funds saw a net decrease of 2.4 tons.
    The combined liquidity of gold ETFs rose month-over- month to $1.23 billion per day, near its annual average of $1.22 billion per day.

    This post was published at Schiffgold on SEPTEMBER 6, 2017.


  • ECB Tightens Noose Around Bank Accounts

    Locking up the money of unsuspecting depositors to prop up collapsing banks. The European Central Bank (ECB), arguably the European Union’s most powerful and least accountable institution, apparently needs more power, according to Daniele Nouy, the ECB’s top supervisor. Chief among the fresh powers it seeks is the power to temporarily prevent people from withdrawing their money from their accounts at banks that are in distress, including by electronic fund transfers.
    ‘In my view… the introduction of adequate moratorium power for authorities is needed in order to react with the needed flexibility, if the situation of a bank deteriorates rapidly,’ Nouy told a member of the European Parliament in a letter. ‘Given the potentially swift evolution of liquidity crises, a moratorium tool could be necessary to ensure there is adequate time for ensuring a credible solution,’ Nouy said, adding that the ECB will soon publish an opinion on this issue.
    The recent collapse and resolution of Spain’s Banco Popular and Italy’s Monte dei Paschi di Siena lent more impetus to this new regulatory push that has been quietly in the works for a while.

    This post was published at Wolf Street on Sep 5, 2017.


  • Why Every European Country Has A Trump Or Sanders Candidate

    Authored by Richard Drake via TheAmericanConservative.com,
    The suicide in the Friuli region of northern Italy earlier this year of a 30-year-old man, identified in the newspapers only as Michele, has become a symbol of the country’s unemployment tragedy, particularly as it affects young people.
    Though much worse in the South, the country’s economic crisis also has had a blighting effect on the North. The national unemployment rate now stands at nearly 12 percent. A 40 percent youth unemployment rate nationwide, however, has people speaking of a generational apartheid in Italy. There is no work to be found for young people. In the workplace, comparatively speaking, they have been walled off from the rest of the population.
    Friuli is a region of plain and mountain in the northeastern part of Italy, flush against borders to the north with Austria and the east with Slovenia. The annals of Friuli antedate by many centuries the arrival of the ancient Romans, who founded the colony of Aquileia there nearly two hundred years before Christ. The barbarian invasions swept over Friuli in the general wreckage of the Roman Empire. An Aquileian state arose in the Middle Ages, but was absorbed in the 15th century by the expanding Venetian empire. Then Friuli passed through French and Austrian phases of occupation and control before becoming part the newly founded Kingdom of Italy, in 1866.
    The Friulani, a highly energetic and resourceful people steeped in the work ethic common to the peasant and artisanal cultures of traditional Europe, tilled the land and also gained a well-deserved reputation for their skill in specialty crafts and the building trades. Typically in such cultures, the work that a man did defined him. The modern world has changed those old ways of life, but the culture they generated persists. More recently, Friuli became renowned for its small businesses and factories, which played a vital role in the national economy. There was still hard work for the Friulani to do.

    This post was published at Zero Hedge on Aug 30, 2017.


  • “The Perfect Storm Is Brewing”: Goldman Warns Italy Has The Lowest Capacity To Absorb Migrants

    While Europe’s economy and capital markets have been spared any major shocks in the past year, and in fact European GDP has been on a surprisingly resilient uptrend in recent quarters led higher by the relentless German export-growth dynamo (courtesy of the very, very low Deutsche Mark and a lot of broke Greeks), an old and recurring problem has re-emerged, one which threatens the stability and cohesion of the European Union itself: the latest surge of refugees which, arriving mostly from North Africa in recent months, has made Italy its primary landfall target resulting in a surge in migrant arrivals on Italian shores. However, with the rest of Europe largely shutting its borders to this refugee influx forcing Rome to deal with what many in Italy see as an unwelcome presence, a distinct sense of bad-will has been floating around Europe in recent months as Rome’s pleas for more solidarity from its European peers have been stubbornly ignored. Meanwhile, Italy has accepted nearly 100,000 refugees in the first six months of the year and the number is rapidly rising.
    Now, a new report issued by Goldman Sachs will likely pour even more gasoline on the fire, as it finds that just as Rome alleges, “Italy has the lowest capacity to absorb migrants among the major EU economies. This is measured using three indicators of integration: (1) economic integration; (2) social integration; and (3) policy effectiveness.”
    While hardly new for regular readers, this is how Goldman lays out the problem:

    This post was published at Zero Hedge on Aug 22, 2017.


  • Baby boomers are refusing to sell and will age like a fine wine in their homes. The dominant force in the housing market.

    Older Americans own half of the houses in the market. Many are simply refusing to sell and others have adult ‘kids’ moving back in since they can’t afford a place to rent or buy. It is a Catch 22 and many people are looking at countries like Italy where the number of adults that live at home is enormous. Multi-generational families just don’t coincide with the ‘rugged American’ worldview where you go out on your own and you make it with your own two hands. Of course, many house humpers had mom and dad chip in but that doesn’t make for such a sexy story. In the end, however there are many baby boomers that simply are not selling. This is actually an interesting problem that is not going away.
    Refusing to sell
    Housing used to be a young person’s game. The U. S. housing market and to a large extent, the economy was driven by home buying and big ticket purchases. But that has definitely changed since the housing market imploded with the 2000s. It has also changed in terms of people marrying later, having fewer kids, and basically preferring to live in city centers versus suburbs. In other words, not a big need for McMansions.

    This post was published at Doctor Housing Bubble on August 11, 2017.


  • Saint-Tropez – The Billionaire’s Harbor is Empty

    When you impose drastic and excessively high taxes to get the ‘rich’ and their yachts, they just sail away. Saint-Tropez, which was known as the ‘Billionaire’s Harbor’ is just about empty. The yachts sailed off to Italy and Spain abandoning the French Riviera. The local government is pleading with Macron to intervene. They say revenue is already off 30% for boating fees. However, the whole community is feeling it because the ‘rich’ spend money more easily in local restaurants and shops. So the whole economy in South France is dropping very sharply.
    In addition, from people I know personally, they have set sail to Portugal to also escape from the refugee madness. It will be interesting to see what happens to the tourism revenue at the end of the summer.
    Armstrong Economics

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


  • Our European Tour

    Our European Tour this season has been very enlightening including meetings with politicians, corporations and many of the top banks. The concern centers around the ECB having to change policy with regard to negative interest rates. The net result has been to create massive hoarding of cash rather than spending cash for the sake of just spending. The banks were hopeful that a rise in rates will bring the money pouring back in for deposits. The real concern has been that the authorities are hard on the big banks while ignoring the small banks. This is true even in Germany, for the lending on real estate in Europe has been extensive and the credit has been questionable although the lending limit on property is running about 80%. However, the income requirement is not stringent and if rates begin to rise, the fear is there may be set in motion a real estate crisis in Europe similar to the S&L Crisis in the States.
    Clearly, the big concerns have been that all the economic theories are turning to dust. Nearly 10 years of quantitative easing has utterly failed to reverse course and the banks are most vulnerable in Southern Europe namely in Greece, Italy, and Spain. The understanding of inflation has collapsed as has the quantity of money theory and the notion that when interest rates rose, the stock market should have dropped. All of these theories still taught in school have crumbled to dust in the real world and people are more and more reaching out for help and explanations other than opinion. Where’s the research? They say.

    This post was published at Armstrong Economics on Jul 31, 2017.


  • FX Week Ahead: Can The Swiss National Bank Breathe A Sigh Of Relief?

    Is the SNB at it again? EURO-phoria takes off as longer term investors get the nod.
    Having focused on the USD in recent weeks, and how the market has rounded on the greenback ‘en masse’, we can finally look to some exchange rate moves outside of the major spot rates. Sharp losses in the CHF have shown that the big money is taking note of the recovery in the Euro zone, and that investment prospects look good as the smaller member states are gaining traction alongside the power house that is Germany. Last week, IFO economists said they saw little which could derail the domestic economy, including the strengthening EUR, which has traded to a little shy of 1.1800 in the past week, but more significantly, taking out the 1.1711/12 (long term range highs in the process. This led to the ‘follow through’ which saw EUR/CHF shooting up to levels close to 1.1400, having spent a year long slumber inside a 1.0600-1.1000 range.
    More data out next week is expected to confirm the above, headlined by EU wide Q2 GDP on the Tuesday, with updated manufacturing PMIs due out for all the leading states, as well as unemployment data. Focus on Germany will be shared out a little to Spain and Italy, also seeing marked improvement in economic activity. Spanish jobs have increased significantly, and in Italy, industrial orders have taken off, so no surprise for widespread calls for the ECB to rein in their APP, but once again, market forces are threatening to choke off some of this recovery. As such, there is growing sentiment that once the ECB do signal policy change in Autumn, there will be a sense of disappointment – naturally linked to the rampant gains in the EUR seen already. German 10yr hit levels shy of 0.65% a few weeks back, but the moderation of some 10bps or so looks to have been a short lived affair as Bunds took a sharp hit as the regional inflation data out of Germany saw healthy pick up. On Monday we will see whether CPI is rising across the region as a whole, but consensus is looking for 1.3% in the headline, 1.1% in the core.

    This post was published at Zero Hedge on Jul 30, 2017.


  • Leaked: EU Plans to Freeze Deposits to Prevent Bank Runs

    Desperate Times, Desperate Measures. Following a spate of drastic banking interventions in Spain and Italy earlier this summer, the European Commission is preparing new legislation to prevent bank runs from completely wiping out Europe’s hordes of zombified lenders. According to an Estonian document seen by Reuters, that legislation would include measures allowing EU governments to temporarily stop people withdrawing money from their accounts, including by electronic fund transfers.
    The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits pushed Banco Popular over the brink in Spain. In its final days, Popular was bleeding deposits at a rate of 2 billion a day on average. Much of the money was being withdrawn by institutional clients, including mega-fund BlackRock, Spain’s Social Security fund, Spanish government agencies, and city and regional councils.
    The European Commission, with the support of a number of national governments, is determined that what happened to Popular does not happen to other banks. ‘The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,’ a source close to the German government said.

    This post was published at Wolf Street on Jul 30, 2017.