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

Poll: AfD Now Germany’s Second-Most Popular Party

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(Photo Credit: Alternative for Germany)

 

A little more than one year after becoming the first “far-right” party to win seats in the Bundestag in more than 50 years, the AfD is now officially the opposition to Merkel’s “grand coalition,” which required alliances with not only Bavaria’s Christian Social Union and the Social Democratic Party to hold a majority of seats. A new poll has placed AfD one point ahead of the SDP in terms of generic support. 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

All Euros Gravitate To Germany

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The Euro has been around for almost 20 years. The Russian transfer ruble survived 25 years. As GEFIRA explains, the two currencies have something in common: they were and are not a success story…

The introduction of the transfer ruble was intended to enable free trade between the countries of the Eastern bloc. The creation of the common clearing system led to the exchange rates for the East German mark, zloty, forint, lev, and even the Mongolian tugrik being arbitrarily fixed by the Soviet Union, regardless of the purchasing power of the national currencies. In the 1960s, the Bulgarian lev was 20% undervalued and the Polish zloty about 45% overvalued. Since the transfer ruble was not yet convertible into Western currencies, it remained an illusion and a means by which the Soviet Union could enrich itself and save its budget at the expense of its satellite states: the Russians bought raw materials, goods, food for convertible currencies in the West and sold them to their “socialist friends” for transfer rubels. The international bank for economic cooperation, which sat in Moscow and handled all transactions in the transfer ruble, swept the real trade surpluses and deficits under the carpet. With the political change the common settlement currency came to to an end, and it turned out that the Soviet Union owed huge sums to its “brothers”. Continue reading

In Sweden, Europe’s Drift To The Right Continues

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“Populism” seemed to have suffered a premature death a year ago. Emmanuel Macron had beaten Marine Le Pen in the French presidential elections, Dutch right-winger Geert Wilders had underperformed massively, and the EU had found — or at least thought to have found — new popularity all around Europe. After a turbulent 2016, in which the UK voted to exit the EU, and which saw Donald Trump become US president, everything seemed well again.

Ever since, however, the tide has turned again, and Europe’s drift to the right, coupled with the ongoing demise of center-left parties, has continued. Highlights of the past year included a strong performance by the Alternative für Deutschland in Germany (they are polling second behind Angela Merkel’s CDU right now), a right-wing coalition government in Austria, and the Italian election in March, which saw two “populist” movements come to power together (and since then causing havoc on the European level). Continue reading

Greece’s Bailout May Be Over, but Not Its Economic Woes

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A ripped off Greek national flag flutters in central Athens on July 22, 2015. (Louisa Gouliamaki/AFP/Getty Images)

 

Underlying obstacles to job creation and entrepreneurship remain

After eight years, Greece has finally exited bailout territory, and the European Union is making a strong case that the program was a success.

While Greece may have ended the bailout process, the underlying issues that wrecked its economy in the first place remain largely intact. Continue reading

Did Germany Win the 100-Year War?

Everything that has been mentioned on Global Geopolitics since 2011 regarding Berlin and it’s United States of Europe project is pretty much summarized within this article. The only thing missing is the end game.

Germany has once again conquered Europe and the entire world has missed it. The plan and timeline has changed but the goals once again remain the same. Instead of Nazis you have Germans running the EU through the Troika with key figures in key places, subjugating the entire continent through political sabotage and economic might. It’s been said oft here that if you’re looking for Nazis, you’re over 70 years late. It’s now a multicultural and multinational European superstate once united by a common goal, but now by force, and by Berlin. It even has its own European Army under construction.

The Fourth Reich has landed.

 

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“Periodization” is a trendy academic term for historians’ use of particular (and sometimes arbitrary) chronological terms—often in reference to wars in general, and in particular to when they started and ended.

Were there really “three” Punic Wars rather than just one that continued for well over a century from 264-146 BC, ending only with the Roman absolute destruction of Carthage? Continue reading

Trump on Possible Iran Meeting: ‘No Preconditions; If They Want to Meet, I’ll Meet’

 

President Donald Trump said during a Monday joint press conference with Italian Prime Minister Giuseppe Conte that he would meet with the leaders of Iran with “no preconditions.”

A Reuters reporter asked Trump if he would meet with Iranian President Hassan Rouhani in a similar way he met with North Korean dictator Kim Jong Un and Russian President Vladamir Putin. Continue reading

Geopolitical crisis : A moribund NATO

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As we have explained on other occasions, NATO is still there, of course, but only because there are no better options at hand. Everyone wants to be rid of it – the Europeans who want a common European defence[1] and Donald Trump who wants Europeans to participate more in their own defence. They are all contributing to a slow process in which NATO continues to get in the way whilst Europeans dither between several strategies:

  • To increase their share[2] and thus acquire an equal say with that of the US within NATO (with the long-term aim of separating off to form a European NATO[3]). Problem: For this strategy to have a chance of success, much greater cohesion is needed in the European camp – something that is still a long way off at the moment. Continue reading

Russia moving into Libya

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Libyan National Army forces, under the leadership of Maj. Gen. Khalifah Haftar, is pushing for a Russian military presence in eastern Libya. (The Washington Times/File) Photo by: Mathieu Galtier

 

U.S. intelligence agencies are closely monitoring Russian military activities in Libya for signs that Moscow may soon build a military base in the divided North African state.

Intelligence reports indicate that Russia is planning to expand its Syrian bases at Tartus and Hemeimeem to Libya.

The possible Russian move into Libya represents the most recent failure stemming from the policies of President Obama that backed Islamist rebels who overthrew and killed Libyan strongman Moammar Gadhafi in 2011.

Mr. Obama has said that the failure to prepare for the aftermath of the ouster of Gadhafi was the worst mistake of his presidency. Secretary of State Hillary Clinton also came under fire for failing to provide security for Americans who were attacked and killed in Benghazi after Gadhafi’s fall. Continue reading

Germans Actually Want US Troops Out Of Germany, Poll Finds

While Donald Trump is 100% correct on Germany being controlled by Russia, it’s not a 100% influence over Germany… and he’s also unwittingly helping someone else fill in the vacuum of a post-American-protected Europe. Europeans have already longed for the day American troops leave Europe, long before this poll ever came out. The question is who will fill that vacuum. The likely answer is a European Army replacing NATO, which is already Under Construction as we speak.

There may be partnerships going on between Europe and Russia, but Europe, militarily speaking, understands the need for its own independent defense mechanism and still feels threatened by Russia despite energy and business deals. Moreover, this is not necessarily something thought of by EU members as a whole, but Germany. Germany is the powerhouse of the EU and has always had ambitions to take Europe — even in this new generation. It dictates its policy and those who don’t follow end up being vassal states like Greece and Cyprus. Although harder to push around, Italy is the next target for the chopping block after the election of an anti-EU leadership. This is Germany’s way of getting member states in sync.

The creation of a new superpower is underway, all lead by Berlin’s Fourth Reich. If you’re still looking for Nazis, you’re 70 years too late. The game plan has changed, but the goal remains the same: A multi-national United States of Europe with its own European Army.

 

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A central irony behind Trump’s rumored “threat” that he could withdraw or at least greatly reduce American troops stationed in Germany, who last month wrote to Angela Merkel of “growing frustration in the United States that some allies have not stepped up as promised” on defense spending, is that Germans don’t actually want US troops on their soil to begin with, according to a new poll. Continue reading

Russell Napier: “Trade War Is The Beginning Of A New Global Monetary System”

A Country Matures, An Exchange Rate Declines

After two weeks on the road visiting clients your analyst returns with a better view of the consensus outlook. There is, though, much in the consensus to disagree with. In particular it seems peculiar that the consensus believes the democratically elected government of Italy, with policies entirely contrary to EU membership, will be put through the bureaucratic meat grinder in Rome and Brussels and turned into EU sausage, in a similar process that minced the political representatives of Greece.

While this might well be the case, it is hard to understand that the grinding destruction of this democracy, even if it is only moderate compared to the Greek experience, can be anything but bad for growth and asset prices in the EU. Disciplining these politicians to abandon their manifesto promises and follow the ways of the EU is highly unlikely to be a painless experience, either for Italy or the rest of the EU. Nonetheless, investors are content to believe that a painless disciplining of Italy’s elected representatives is all but inevitable. We shall see.

Perhaps the most prevailing consensus view is that the recent weakness of the RMB represents a Chinese counter-punch in the trade war with the US. Coming when it does, it is easy to see the accelerated decline of the RMB as a tactical and not a strategic move. Comments by the PBOC on July 3rd have probably reassured many investors that the managed exchange rate regime is not at risk and that the RMB will continue to be managed against a basket of currencies. Your analyst does not agree. Continue reading

The European Intervention Initiative: a New Military Force Established in Europe

The European Intervention Initiative: a New Military Force Established in Europe

 

The predictions have come true about the emergence of a new defense group that will change the European security environment. On June 25, the defense chiefs from nine EU countries signed off on the creation of a new force called the European Intervention Initiative (EII), which is spearheaded by French President Emmanuel Macron. The new organization will have a common budget and a doctrine establishing its guidelines for acting and joint planning for contingencies in which NATO may not get involved. The group includes the UK, Germany, Denmark, the Netherlands, Belgium, Estonia, Spain, and Portugal. Italy may join soon. The initiative is not tied to the EU’s Common European Defense, which includes the PESCO agreement as well as NATO. Great Britain has always opposed the idea of creating a European defense alliance, fearing it would undermine transatlantic unity. Now it has done an about-face, as the rifts within the US grow deeper. Continue reading