European Central Bank In Panic Mode as Economy Stalls

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The eurozone could not borrow from the momentum of the U.S. economy in the third quarter as economic growth slumped to a tepid 0.2% , the slowest rate in more than four years. With the 19-nation currency bloc beginning to stagnate, and the heavyweights failing to post significant gains, Brussels is in panic mode, likely leaning on the European Central Bank (ECB) for further stimulus.

Economists originally anticipated growth of 0.4%. But global trade woes, tumbling business confidence, Italian distress, and the gradual dissipation of an accommodative monetary policy all contributed to the poor numbers in the July-September period. Continue reading

Italy Declares War on Merkel and the EU

Italy Declares War on Merkel and the EU

 

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

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

The ECB on the Verge of Collapse?

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The European Central Bank (ECB) will aid Italy with an EU rescue program if the country or its banks are in financial turmoil because they are taking the view that Italy has become an “occupied” country and that Germany has conquered Europe imposing austerity and its view of inflation upon the whole of Europe without firing a shot. While the spin is that the ECB is making Italy a test case to demonstrate that Europe and its mechanisms work, in reality, it is a realization that the ECB cannot save Italy’s financial institutions because austerity has created the greatest economic depression perhaps in economic history. Continue reading

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

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

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

Europe Launches War On Italy’s Fiscal Plans: Warns Of Debt “Explosion”, Threatens Savers

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In the aftermath of Italy’s defiant announcement that it would expand its 2019 budget deficit to 2.4% of GDP, above both the initial proposal from finmin Tria which was 1.6%, and also higher than the European “redline” of 2.0%, the question was how would Europe respond to this open mutiny by Italy.

The answers started to emerge on Friday, when European Parliament head Antonio Tajani said that fiscal targets set by Italy’s eurosceptic government were “against the people” and could hit savers without creating jobs.

“I am very concerned for what is happening in Italy,” said Tajani, who is a center-right opposition politician in Italy and close ally to former Prime Minister Silvio Berlusconi. The budgetary plans “will not raise employment but will cause trouble to the savings of the Italians,” Tajani said. Continue reading

Germany Has Made Over 3 Billion Profit From Greece’s Crisis Since 2010

Extorted, subjugated and conquered. Greece has been a German vassal state for years already.

 

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Germany has earned around 2.9 billion euros in profit from interest since the first bailout for Greece in 2010.

As KeepTalkingGreece reports, this is the official response of the Federal Government to a request submitted by the Green party in Berlin.

The profit was transmitted to the central Bundesbank and from there to the federal budget. Continue reading

“It’s A New Chapter For Europe”: Merkel, Macron Unveil Plan To Reform Europe

Lost among the other overnight news, was the launch of “a new chapter” for the EU as termed by Germany’s troubled chancellor Merkel. After her meeting with French President Macron on Tuesday, Merkel said Germany and France have agreed to cooperate to reform the EU’s asylum system as both “understand the topic of migration is a joint task” and “our goal remains a European answer to the challenge.” What she really meant is that if her government is toppled by the collapse of the CSU-CDU coalition – recall Merkel has a 2 week ultimatum to reach a solution on Germany’s treatment of refugees by July 1 – the rest of Europe gets it too, and the grand experiment is over.

Aside from immigration, the two leaders agreed to an in principle plan to strengthen the Euro area, including setting up a euro-area budget and a crisis backstop under the ESM (European stability mechanism), although they postponed decisions on some elements which could prove consequential. Chief among them: specifics on the size and conditions of the euro-area budget. Continue reading

Why Italians are fed up with Europe

Joep Bertrams

 

The rise to government of Eurosceptic parties is the consequence of austerity policies made in the name of cleaner public finances and of the euro convergence criteria.

Two Eurosceptic forces are now governing Italy. On one hand the 5-Star Movement, the anti-system party of Luigi de Maio founded by the humorist Beppe Grillo. On the other, far-right xenophobic Liga led by Matteo Salvini. How could this have happened? How did one of the European Union’s six founding members, host of Treaty of Rome in 1957, and for a long time the EU’s most Europhile country, give a parliamentary majority to groups so hostile to European integration? Continue reading

A Central Banker’s Plan for Your Money

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Jim Rickards calls them “silent dog whistles.”

Through these signals, in the frequencies beyond normal human hearing… elites communicate with each other.

Their communications are public.

But their language can be so thick, so technical — so innocuous — not one in a hundred can crack it open.

Only the intended audience can penetrate the deeper message within… and that audience is their fellow elites. Continue reading

The EU’s Backdoor Path to a Unified Superstate

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

The Central Bank Crisis on the Immediate Horizon

 

While the majority keep bashing the Federal Reserve, other central banks seem to escape any criticism. The European Central Bank under Mario Draghi has engaged in what history will call the Great Monetary Experiment of the 21st Century – the daring experiment of negative interest rates. A look behind the scenes reveals that this experiment has been not just a failure, it has undermined the entire global economic structure. Continue reading

EU goes Head-to-Head with USA in growing currency war – ‘We are Concerned!’

EU USA

Washington and Brussels are locking horns in a dispute over currency, tax and trade [Getty]

 

THE EUROPEAN Central Bank has accused the US of manipulating exchange rates as tensions between Brussels and Washington continue to escalate wildly.

The ECB is concerned the US is attempting to exert “political influence” on exchange rates, with the issue set to explode into outright confrontation at an upcoming G20 meeting.

The eurozone bank said it was “certainly concerned” by perceived attempts to influence the exchange rate in favour of the US dollar.  Continue reading

EU Plan Lets Banks Take Deposits in Crisis

The European Central Bank has unveiled a new set of banking plans that will allow failing banks to freeze their deposits in the event of an economic catastrophe to prevent further bank failures.

 

The European Central Bank has unveiled a new set of banking plans that will allow failing banks to freeze their deposits in the event of an economic catastrophe to prevent further bank failures. Continue reading

Japan’s Shifting Power Alliances

 

I’ve just wrapped up a long trip to Japan. And I’ve taken away one lesson from all of my conversations, speeches and research: The rise of nationalism in the U.S. will cause massive shifts in global trade alliances.

One of the main beneficiaries will be Japan. Now, Japan might not be on your radar, day-to-day, but it’s about to play a very important role in the world of Donald Trump.

Here’s what I mean… Continue reading

ARMSTRONG: Major Central Bank May Fail Next Year

Many analysts are fearful of an impending downturn as early as next year. In an exclusive interview with FS Insider, legendary forecaster Martin Armstrong of ArmstrongEconomics.com explained his outlook on the global economy and markets, including a bold call that, as early as next year, “we’re looking at a central bank that can go bankrupt” — a topic that will be the focus of a July conference in Frankfurt.

Armstrong is a unique, contrarian thinker and has made a number of accurate forecasts over the years, especially since we’ve been speaking with him on our podcast. A key theme of his analysis is that economic growth is likely to remain stagnant as nations around the globe struggle with large debt burdens. However, rather than calling for a collapse in the dollar and the US stock market, as many bears have long predicted, Martin has taken the opposite view, focusing instead on the needs of institutional investors to earn yield by increasingly allocating capital into stocks and highly-rated corporate bonds, which helps to fuel the stock market higher. Continue reading