Following our discussion of Europe’s angry response to Trump’s unilateral Iran sanctions, in which European Union budget commissioner, Guenther Oettinger made it clear that Europe will not be viewed as a vassal state of the US, stating that “Trump despises weaklings. If we back down step by step, if we acquiesce, if we become a kind of junior partner of the US then we are lost”, moments ago Reuters reported that the European Commission is set to launch tomorrow the process of activating a law that bans European companies from complying with U.S. sanctions against Iran and does not recognise any court rulings that enforce American penalties.
“As the European Commission we have the duty to protect European companies. We now need to act and this is why we are launching the process of to activate the ‘blocking statute’ from 1996. We will do that tomorrow morning at 1030,” European Commission President Jean-Claude Juncker said.
The European Union (EU) is considering switching to euros instead of U.S. dollars in the oil trade with Iran, Sputnik reported on Wednesday, quoting a diplomatic source.
Iran, for its part, said as early as in mid-April that it would be switching to euros from U.S. dollars in reporting foreign currency amounts, to reduce the reliance on the dollar as it was expected that President Trump would not waive the sanctions this time around.
The EU vowed on Tuesday to seek ways to work and trade with Iran. Continue reading
BERLIN/TEHRAN/WASHINGTON (Own report) – In talks with Iranian government officials on Tuesday, the German government will seek a solution in the dispute over the nuclear deal with Tehran. While trying to defend the interests of German industry, it is aiming for an independent Middle East policy. Because of its close alliance with Washington in the power struggle with Moscow and Beijing, this would be very important, as legitimization of Berlin’s claims to playing a leading role in global policy. While commentators are encouraging the government, the minister of the economy and business circles are warning against exacerbating the conflict with Washington. It is very risky for the German elite’s prosperity, because the United States is the largest market for German companies and, by far, their most important investment site. On the other hand, in Iran, the EU countries’ industry risks irrevocably losing out to China, due to the US sanctions.
For years there has been a struggle in the Eurozone between those that want to transform it into a transfer union and those that who want a Europe of independent and cooperating countries. The latter including Austria, Finland, the Netherlands and Germany want strict limits for deficits and debt brakes as envisioned in the Fiscal Stability Treaty. Some, such as the European Constitutional Group, even demand a mechanism for an orderly break-up of the Eurozone. The former including Mediterranean member states led by France, do not openly call their objective a fiscal union or the creation of a “European Super State” but prefer to talk about a “deepening of the European project.” The reason for this division is straightforward: The central and northern European countries would be the contributors to a transfer union while the club Med would be on the receiving side. Continue reading
Note: Please see the source for currency swap agreements chart.
For the past year and half a major topic throughout the alternative press has been the new Chinese oil futures contract settled/priced in yuan. The fact that China is directly challenging the Federal Reserve Note, U.S. dollar, is quiet a significant change. For those that have been paying attention this new futures oil contract is nothing more than the next step in China moving completely away from the Federal Reserve Note, and the “world reserve currency” system and towards a multi-polar world with several currencies being used for international trade. Continue reading
Brussels has issued some thinly veiled threats to countries that essentially asks them to forego their national, legal sovereignty if they want to keep receiving EU funds…it sounds a bit like a ransom note.
The US sanctions against Russia are pointless and are placing the West at risk the politicians are too stupid to even comprehend. Already, some Russian companies have asked the government for liquidity injections of up to $2 billion. Even the world’s second-largest aluminum producer Rusal has asked for help. Nevertheless, the impact of sanctions goes beyond the internal borders of Russia for they also impact the international financial markets. Continue reading
The editor in chief of Europe’s largest newsmagazine has written America’s obituary—quite literally. The title of Klaus Brinkbäumer’s new book is An Obituary for America: The End of a Friendship and the Future of the West.
In it, the Der Spiegel editor in chief reaches two surprising conclusions: America is dead, and Germany should be happy about it.
Spiegel Online published an article adapted from Brinkbäumer’s book under the title “Thank You, Donald! What Trump Means for Germany’s Future.”
The U.S., writes Brinkbäumer, is no longer a reliable partner. Therefore “we must emancipate ourselves.” Continue reading
Germany has started to pour concrete on a Russian gas pipeline that risks dividing the EU and harming its energy security.
The construction began in Lubmin, on Germany’s Baltic Sea coast, on Thursday (3 May), with the laying of foundations for a terminal that will receive 55bn cubic metres (bcm) a year of Russian gas via the Nord Stream 2 pipeline when it goes online in 2020. Continue reading
The Cologne Institute of German Business sees in the planned European deposit insurance is simply incapable of proving protection against a bank crash in Europe. The EU deposit guarantee is simply not practical under any concept of austerity. The Eurozone still has inherent significant risks in the balance sheets of European financial institutions. This is primarily because where the USA took the bad loans from the banks and stuffed them into Freddie and Fanny, in Europe, the bad loans are still on the books of the banks. Systemically, this has been the leading problem why Europe has been unable to recover and Quantitative Easing merely robber savers of their income and it failed completely to stimulate the economy. Banks were still reluctant to lend and people would not borrow if they did not have confidence in the future. Continue reading
Beijing sent the first messaging salvo ahead of the Steven Mnuchin-led delegation to China (which will engage in trade talks over May 3-4) overnight when the PBOC fixed the yuan sharply lower than many expected. The signal was clear: push us hard enough, and we may just launch another devaluation. Or worse.
A little while later, Beijing did its best attempt at managing expectations, when it said that it’s “unrealistic” to expect to solve all issues between the U.S. and China at a single meeting, given the economic sizes of the two countries and their complex economic and trade relationship, foreign ministry spokeswoman Hua Chunying says at daily briefing.
While Hua tried his best to pay the diplomatic “good cop”, saying it was in the mutual interest of both countries to solve trade issues through consultation, just a few hours later, China’s foreign minister Wang Yi was the bad cop, who warned that whereas China would welcome a successful outcome from upcoming trade talks with the United States, it is “fully prepared for all outcomes and will not negotiate on core interests.”
“A coming debt crisis in the US?” warns a Deutsche Bank report* by Quinn Brody and Torsten Slok.
This graph is gorgeous. US deficits have, historically, been driven overwhelmingly by the state of the business cycle, and have very little to do with tax policies and spending decisions that dominate press coverage. In booms, income rises, so tax rate times income rises. In busts, the opposite, plus “automatic stabilizer” spending kicks in.
Until now. Continue reading
It would appear that the US is seriously worried about China’s technological advancements. Fearing the loss of the last comparative advantage over the Asian superpower has caused a genuine concern over national defense and competitiveness among America’s ruling elite.
The US using every possible means to curb Asia’s technological rise, including the banning of sales of essential chips to ZTE for seven years, invoking Section 301 of the Trade Act to investigate China’s “unfair trade practices” and barring investment in the information-technology sector. The Donald Trump administration’s target might be the Asian power’s “Made in China 2025”, a strategy meant to make China self-sufficient in an array of technologies.
The 301 investigation was meant to slow down China’s technological advancements by imposing stiff tariffs on a host of Chinese imports and barring the sales of US technology to Chinese firms. In addition, the anti-China faction of the US Congress and the Trump administration have barred Chinese investment in technology sectors. Continue reading
Professor Niall Ferguson visited São Paulo in April to address Itaú’s annual MacroVision conference, and found time to sit down with Euromoney to talk fintech, social media and trade. In particular he focused on China and how it will impact Latin America’s future.
Euromoney meets with Ferguson later that day, a little uncertain about Ferguson’s range of knowledge and experience of Latin America. Such concerns were laid quickly to rest with Ferguson’s response to the opening question, which picked up on a point that he had made in his speech about the relative speeds of adoption of mobile payments in Asia (and China in particular) compared with the US. Could emerging markets in Latin America reach Asian levels of near-universal adoption of new payment technologies? Continue reading
Do you have the nagging sense that our empire is in decline?
If so, don’t be embarrassed by it. Historically speaking, we’re in very good company. Far larger and longer-lived empires than ours have come and gone over the millennia.
This was hit home for me on a recent trip. I scored a major “dad win” by taking my youngest daughter, Grace, to England for her 18th birthday (we live in Massachusetts, USA).
All on her own, Grace developed an abiding love of mythology at a very young age: Greek, Roman, Norse, Native American, Aztec…you name it. She’s read the Iliad four times, a different version each time, as each has the biases of the translator subtly woven throughout. Continue reading