Feb 032019
 
 February 3, 2019  Posted by at 11:11 am Finance Tagged with: , , , , , , , , ,  


Richard Oelze The expectation 1936

 

‘Gilets Jaunes’ Hold 12th Weekend Of Protests, Denounce Police Violence (EN)
More Rubber Bullets And Tear Gas At Yellow Vests Protests (DM)
Rebel Labour MPs Set To Quit Party And Form Centre Group (O.)
Labour Slump Gives Tories Biggest Lead Since General Election (O.)
Voters Will Never Forgive Tories For A No-Deal Brexit Disaster – Minister (O.)
Corbyn Calls For Snap Election To Help Put An End To Austerity (G.)
Queen To Be Evacuated If Brexit Turns Ugly (R.)
“We Are The Meteor… They Are The Dinosaurs…” (Saker)
La Dolce Vita Slips Away Again As Italy Tumbles Back Into Recession (O.)

 

 

 

 

For some reason, found it very hard to find info on the Yellow Vests’ Act 12 yesterday. The media can’t be bothered.

But interesting that some French kangaroo court says sure, keep aiming at your people’s eyes with those Flash-Balls.

Oh, and Macron saying he’s a Yellow Vest too is priceless.

‘Gilets Jaunes’ Hold 12th Weekend Of Protests, Denounce Police Violence (EN)

https://twitter.com/i/status/1091617683160879104

Thousands of “gilets jaunes” (yellow vests) protesters marched through Paris and other French cities on Saturday for the 12th consecutive weekend of anti-government action, as they paid homage to those injured by police in previous demonstrations. Participants carried French flags and placards denouncing the government of President Emmanuel Macron, while a large banner showing photographs of people injured in clashes with police took centre stage at the march in Paris. The protest came after France’s top administrative court ruled on Friday that police could continue using controversial rubber-ball launchers against protesters.

Known as Defence Ball Launchers, the weapons fire rubber projectiles the size of golf balls, and have been blamed for leaving gilets jaunes with serious injuries including lost eyes and broken limbs. The judge said it was “necessary to allow police to use these weapons” because the protests were “frequently the occasion for acts of violence and destruction.” Around 1,000 police officers and 1,700 demonstrators have been injured since the protests began, according to official figures. [..] Macron launched a “Great National Debate” in a bid to resolve the crisis. On Thursday, he said that he too was a gilet jaune “if it meant being in favour of better salaries and having a more effective parliament.”

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The French government has insisted there was ‘no indication’ the guy last week lost his eye to a police projectile. They really do everything wrong.

More Rubber Bullets And Tear Gas At Yellow Vests Protests (DM)

Weapons including controversial rubber bullets were used against French Yellow Vests demonstrating on behalf of the ‘victims of police violence’ as they rioted in central Paris today. Heavily armed officers also used tear gas, baton charges and water cannons against members of the mass anti-government movement, who are named after their high visibility motoring jackets. They were staging their 12th Saturday in a row of demonstrations aimed at getting President Emmanuel Macron to resign. ‘We want him out, but we also want the police to stop wounding us with their Flash Ball weapons,’ said Jacques Caron, a 33-year-old Yellow Vest, who was on the street close to Place de la Bastille. The Interior Ministry reported 80,000 security officials had been deployed across France as the action erupted for a 12th successive Saturday.

In Valance in the south of France, the mayor said measures had been taken to prepare for about 10,000 demonstrators. Authorities fear up to 1,000 of those could be violent rioters. France’s top administrative court ruled Friday that police could continue using a rubber bullet launcher blamed for dozens of injuries during the Yellow Vest protests which have roiled the country since November. Last weekend Yellow Vest leader Jerome Rodrigues, 40, lost an eye after being hit by a fragment from a police projectile fired at him. Like others who have been mutilated in recent months, he said he was hit by a so-called Flash Ball – rubber projectiles fired from police guns. A bid to have them outlawed failed last week, and numerous officers were seen carrying them today.

There were 5,000 police and gendarmes standing by for trouble in the French capital today, and it started in the late afternoon when a march got close to Place de la Republicque. ‘Macron Resign’, the crowd chanted, as they threw bottles and anything else they could find at police. Huge white clouds of tear gas were smothering the area, covering rioters, as well as tourists. By 4pm there had been around 15 arrests in the Paris areas, many of them of suspected rioters carrying potential weapons, and for violent disorder. Rodrigues, 40, has bravely taken to the streets again this weekend after he suffered the life-changing injury. The French government has insisted there was ‘no indication’ he was injured by a police projectile.

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This should have happened at least 3 years ago, so they could have contested the Brexit vote. Useless now.

Rebel Labour MPs Set To Quit Party And Form Centre Group (O.)

A group of disaffected Labour MPs is preparing to quit the party and form a breakaway movement on the political centre ground amid growing discontent with Jeremy Corbyn’s leadership on Brexit and other key issues including immigration, foreign policy and antisemitism. The Observer has been told by multiple sources that at least six MPs have been drawing up plans to resign the whip and leave the party soon. There have also been discussions involving senior figures about a potentially far larger group splitting off at some point after Brexit, if Corbyn fails to do everything possible to oppose Theresa May’s plans for taking the UK out of the EU.

On Saturday night, three of the MPs widely rumoured to be involved in the plans for an initial breakaway – Angela Smith, Chris Leslie and Luciana Berger – refused to be drawn into talk of a split, and insisted they were focused on opposing Brexit. But they did not deny that moves could be made by the spring or early summer. Meanwhile, Brexit was being blamed for playing an “inevitable role” in the reported decision by Nissan to abandon plans to build its X-Trail model at its Sunderland plant. According to Sky News, the company will confirm cancelling plans to build the new version of the SUV on Monday, just 53 days before Britain is scheduled to leave the EU.

Sunderland Central Labour MP Julie Elliott said: “The constant uncertainty, the chaotic government. None of it is conducive to encouraging business investment in this country.” Leslie described rumours of a breakaway as “speculation” but said: “A lot of people’s patience is being tested right now. I think there are some questions we are all going to have to face, especially if Labour enables Brexit.”

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Corbyn couldn’t have done worse if he tried.

Labour Slump Gives Tories Biggest Lead Since General Election (O.)

The Conservatives have recorded their biggest lead since the last general election after support for Labour slumped by six points, according to the latest Opinium poll for the Observer. Theresa May’s party recorded a seven-point lead over Labour in the poll, its biggest since the disastrous election campaign that left her without a majority and relying on the support of Northern Irish DUP MPs. Labour’s support fell from 40% in the last poll to 34%, while Tory support went up from 37% to 41%. It comes despite continued infighting within the government over Brexit, including a record parliamentary defeat for the prime minister over her proposed deal.

The latest Opinium poll suggests that Labour has lost support from both sides of the Brexit debate. Labour has dropped five points among both remainers and leavers. For the first time since the election, less than half of remainers (49%) would opt for Labour. Approval for May’s handling of Brexit had increased slightly, while support for Jeremy Corbyn’s handling of the issue has slumped to an all-time low. May’s approval ratings on Brexit edged up slightly to -30%, with 25% approving and 55% disapproving. Her rating had been -33% a fortnight ago.

Meanwhile, Corbyn’s net rating on the issue is now -44%, with 16% approving and 61% disapproving. His rating was -40% in the last poll a fortnight ago. Only 42% of current Labour voters approve of the way Corbyn has responded to the government on Brexit, while a quarter (26%) disapprove.

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Both existing leading parties in Britain are obsolete. Same as in so many other countries. What’s the big deal? Both Labour and Tories will be gone soon, but with leaving a giant Brexit hole behind.

Voters Will Never Forgive Tories For A No-Deal Brexit Disaster – Minister (O.)

Voters will be right to turn on the Conservative party should it allow Britain to crash out of the European Union without a deal, one of Theresa May’s ministers has warned. With concerns rising about a no-deal Brexit across Whitehall and inside the cabinet, Richard Harrington, a business minister, said that such an outcome would turn “a crisis into a catastrophe”, with manufacturers already stockpiling at the fastest rate since records began in the early 1990s. His intervention comes as some cabinet ministers are understood to believe that they have less than two weeks to persuade the prime minister to back a delay to Brexit, before a vote in parliament could force her hand.

MPs are due to hold another round of Brexit votes on 14 February. One senior government source said it was now “increasingly hard” to see how Britain would leave on schedule at the end of March. Writing for the Observer, Harrington calls on MPs to “grasp the nettle” and force through an extension of Britain’s EU membership, should the government and parliament fail to agree an acceptable exit deal. He also issues a stark warning about the electoral consequences for his party should it allow the UK to crash out of the bloc. “I understand the concerns of some MPs about being seen to delay or frustrate Brexit,” he writes. “And I know that, for others, they just want to ‘get on with it’.

“But however bracing the prospect of instant liberation from the EU may feel in abstract, that sentiment won’t last long when confronted with the economic, legal and practical reality. In the chaos that followed no deal, voters would turn on the Conservative party, and rightly so. “So it is time to focus on what in the end matters most – supporting growth and jobs in the UK … a no-deal Brexit would undermine all our efforts. It would entrench the social and economic divisions in this country, not heal them. And it … would turn a crisis into a catastrophe. That is why on 14 February … parliament needs to rule it out once and for all.”

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Talk about lousy timing. Austerity has been Britian’s main issue for years. But not now. Brexit is the big kahuna now.

Corbyn Calls For Snap Election To Help Put An End To Austerity (G.)

Jeremy Corbyn has called for a snap general election during a meeting of anti-poverty charities in Glasgow. He said people who have experienced “the brunt of nine years of austerity” must be allowed a new vote. The Labour leader met with voluntary organisations and charities working to tackle poverty in south-west Glasgow on Saturday, where he criticised “Tory cuts” while pointing to double-digit yearly increases in food bank use and falling life expectancy in Scotland’s most populated city. “People are suffering under austerity as a direct result of Tory cuts in Westminster passed down by the SNP in Holyrood,” he said. “The people who are bearing the brunt of nine years of austerity cannot wait years for a general election. They need a general election now.”

Corbyn paid tribute to the volunteers and charities that have stepped in to support people who are suffering, but said people should not have to rely on the voluntary sector. “It is a disgrace that people are living on the streets and forced to rely on food banks in one of the richest countries in the world,” he added. “The SNP government has not just passed on Tory austerity, it has quadrupled it for local councils. And this week’s budget will mean another £230m in cuts that will hit local services the people of Scotland rely on. “There is a clear choice between more austerity or a Labour government that will put an end to austerity and build a country for the many, not the few.”

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Enough colonies left still?!

Queen To Be Evacuated If Brexit Turns Ugly (R.)

British officials have revived cold war emergency plans to relocate the royal family should there be riots in London if Britain suffers a disruptive departure from the European Union, two Sunday newspapers have reported. “These emergency evacuation plans have been in existence since the cold war but have now been repurposed in the event of civil disorder following a no-deal Brexit,” the Sunday Times said, quoting an unnamed source from the government’s Cabinet Office, which handles sensitive administrative issues. The Mail on Sunday also said it had learnt of plans to move the royal family, including Queen Elizabeth, to safe locations away from London.

In January an annual speech by the Queen, 92, to a women’s group was widely interpreted in Britain as a call for politicians to reach agreement over Brexit. Jacob Rees-Mogg, a Conservative MP and keen supporter of Brexit, told the Mail on Sunday he believed the plans showed unnecessary panic by officials over a no-deal Brexit as senior royals had remained in London during bombing in the second world war. But the Sunday Times said an ex-police officer formerly in charge of royal protection, Dai Davies, expected Queen Elizabeth would be moved out of London if there was unrest. “If there were problems in London, clearly you would remove the royal family away from those key sites,” Davies was quoted as saying.

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A comment to an article at the Saker that was turned into an article, and copied by Zero Hedge. All nice and all until the anonymous writer says young people since they grew up on the internet are less brainwashed. I’d claim the opposite.

“We Are The Meteor… They Are The Dinosaurs…” (Saker)

The dinosaurs that are in control of our nation are old and do not understand any other way of life other than vicious imperialism. They do not understand compassion, empathy, understanding, respect, or love. The world has been this way for thousands of years. We are attempting to transition from the old ways of conquering, war, domination, and enslavement into an entirely new dimension, but the Old forces are not allowing this transition to come easily. They are fighting with everything they have. They have full control over our nation’s mainstream media establishment, and furthermore they have full control over the world’s global financial system and how it operates. This gives them incredible power to get away with almost anything they want to get away with.

The reality is that most Americans, and I agree with you it’s not right, don’t pay attention to what is actually going on in the world. They have their cars, their houses, and they don’t think too deeply about the world around them. For the have-nots, aka the poor, they are too disenfranchised and homeless or whatever to do anything about it. Nobody is united. There are only small groups, and small pockets of resistance here and there. Previous attempts to break this mold, which were led by John F Kennedy, and Martin Luther King, ended in assassination. Not enough people questioned the official narratives, at the time, surrounding these assassinations. Very few question the events of 9/11 and very few people take a look at what is happening outside of what the mainstream media is telling them. People’s needs are generally taken care of, and that’s all that matters to them.

The only real hope now lies in the younger generations. Those who grew up with the internet. They are a little less brainwashed. They read alternative media. They have access to more information, and therefore, the truth. They are questioning things. They are angry about what is happening and what their country is doing. Furthermore, there is a growing sense amongst the general population that the “powers that be” and the mainstream media do not serve their interests. (Which is why Trump was elected). So I would not say that all hope is lost and the US is doomed to start WW3.

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The Observer tries to go anti-populist, but trips up over the fact that Italy’s been falling for well over a decade, which actually caused the rise of populism.

La Dolce Vita Slips Away Again As Italy Tumbles Back Into Recession (O.)

Sharing his predictions on the economy less than a month ago, Luigi Di Maio, the Italian deputy prime minister, believed the country was on the cusp of an economic miracle akin to the one enjoyed in the 1960s. “During that period we built highways, now we can build digital highways,” he enthused. His comments were met with derisive laughter. There was even less to laugh about on Thursday when figures revealed that Italy, which is saddled with a public debt of about 130% of GDP, had lurched back into recession for the third time in a decade. [..] Officials in Rome can only look back over the past 10 years with sadness. Italian GDP is about 5% below where it stood in 2008 and unemployment, which hovered around 6% before the financial crisis, remains stubbornly at just over 10%.

Poverty levels are up and there is little extra money in the kitty to invest for the future without increasing the country’s enormous debts. A budget forged by the coalition of Salvini’s League party and Di Maio’s Five Star Movement (M5S) was agreed in December after months of battling with the European commission. At issue was the debt mountain and how the coalition planned to increase it in breach of EU rules. The EU’s 3% annual deficit limit was safe, but the rule preventing member states from increasing already high debt-to-GDP levels was going to be contravened. A compromise was reached once the EU accepted forecasts for 2019 that showed Italian GDP increasing by an optimistic 1%.

With the economy now in recession as it enters the new year and GDP growth flat at best, the prospects for maintaining Italy’s debt mountain at 130% of GDP are slim. Lorenzo Codogno, a former chief economist at the Italian finance ministry, believes the budget has set Rome on course for another crisis. “All the leading indicators suggest the first quarter of the year will be as bad as the last, and the second quarter will be flat. It’s likely things will pick up from there, but even then, it will mean the economy finishes the year in a weak position,” he says. Salvini and Di Maio have put increases in pension entitlements and plans to introduce a basic income high on their agenda, along with taxes on banks and cuts to business tax reliefs.

Read more …

Jun 032018
 
 June 3, 2018  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , , ,  


Andrew Wyeth Christina’s world 1948

 

Why Italy Had To Say Goodbye To The Dolce Vita (David McWilliams)
An Italian Exit May Be Rome’s Best Option – JPMorgan (ZH)
Angela Merkel Rules Out Debt Relief For Italy (CNBC)
New Italy PM Starts Off In Shadow Of His Powerful Deputies (AFP)
Juncker: EU Won’t ‘Meddle’ In Italy’s Affairs (O.)
Political Bruiser Sánchez Stuns Spain To Become PM (Spain Report)
Europe: Confront Trump or Avoid a Costly Trade War (NYT)
US Wants Structural Changes To China’s Economy: Mnuchin
Uber’s ‘Business Is Finished’ In Turkey, Erdogan Says (R.)
Britain’s Low-Paid Face Decade Of Wage Squeeze (O.)
UK Universal Credit Change To Bar 2.6m Children From Free School Meals (Ind.)
Whale Dies From Eating More Than 80 Plastic Bags (AFP)

 

 

Excellent from David McWilliams on what the euro has done to Italy.

Why Italy Had To Say Goodbye To The Dolce Vita (David McWilliams)

Sometimes it is not appreciated quite how industrial Italy is. It has long been Europe’s second-biggest manufacturing power, beaten only by Germany. Italy is far more industrial than France or the UK. In some areas of design and high-quality manufacturing, Italy is still without peer. However, since it gave up the lira and adopted the euro – in effect Germany’s currency – things have gone pear-shaped. This economic calamity is driving Italian politics, leading many to question the euro and Italy’s membership of it. From 1945 to 1995 there was an understanding that Italy would devalue the lira. This is what Italy did. Traditionally, it devalued the lira every few years. This kept Italian industry competitive.

For example, when Italy joined the European Monetary System, in 1979, the exchange rate was 443 lire per Deutschmark. By 1990, the year of German reunification, the rate was 750 lire to the Deutschmark. By 1995 it was 1,000 lire to the Deutschmark. In the 1992 currency crisis the lira fell to a low of 1,250 against the Deutschmark before recovering a bit. The gradual fall in the value of the lira was a price that the Italians were prepared to pay for industrial success. Contrary to the dogma spouted by Europe’s central bankers, Italian devaluations worked particularly well. From 1979 to 1998, Italian industrial production outpaced that of Germany by more than 10%. Italian equities outperformed German equivalents by 16% – after having taken into account the devaluations.

So not only was Italian industry growing faster than German industry, aided by lira devaluations, but also the return on capital in Italy was higher than in Germany. This is because if the stock market of a country is outperforming another country’s, it implies that the capital that is deployed in the faster-growing country is being deployed more efficiently. Therefore, not only was Italy growing more quickly than Germany, but it was more efficient too. Then came the euro. Since Italy joined the single currency, almost to the day, its industry has gone backwards. Having outperformed German stocks during the period of the lira, Italian stocks have underperformed German stocks by a whopping, bankruptcy-inducing 65%.

During the half-century when Fellini was writing the story of postwar Italian success, the Italian stock market almost always returned more than the German stock market. Once Italy joined the euro that stopped almost overnight. Deep in the economy, the strictures imposed by the euro have destroyed much of Italian industry. For example, having outgrown Germany’s industrial output in the 1980s and 1990s by 10%, Italian factory output since Italy joined the euro has lagged Germany’s by 40%.

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Hard to summarize this long Zero Hedge piece. Depending on where you look, Italy may not be all that weak.

“If you owe the ECB €10 billion, you have no leverage. If you owe the ECB €426 billion, you have all the leverage.”

An Italian Exit May Be Rome’s Best Option – JPMorgan (ZH)

[..] with €426BN, Italy has the highest Target2 deficit with the Eurosystem (Spain is a close second with €377BN) any discussion about an Italian euro exit raises concerns about costs. [..] due to QE induced cross border flows since 2015, Target2 balances have exploded since the launch of the ECB’s QE (and third Greek bailout in 2015), and surpassed the previous extremes from the depths of the euro debt crisis in the summer of 2012.

[..] a euro exit by a debtor country would represent more of a cost to creditor countries such as Germany rather than to the exiting country itself. And, as shown in the chart above, Germany sure has a lot of implicit accumulated costs, roughly €1 trillion to be precise, as a result of preserving a currency union that allowed German exporters to benefit from a euro dragged lower by the periphery, relative to where the Deutsche Mark would be trading today. But here the analysis gets slightly more complex, as Target2 does not provide the full picture of potential costs (or benefits, assuming a scorched earth approach). As JPMorgan writes, the Target2 liabilities of a debtor country give only a partial picture of the cost to creditor nations from that debtor country exiting.

This is because Target2 balances represent only one component of the Net International Investment Position of a country, i.e. the difference between a country’s total external financial assets vs. liabilities. The broader metric that one must use, is of the Net International Investment Position for euro area countries and is shown in the chart below. It shows that contrary to the Target2 imbalance, Italy leaving the euro would inflict a lot less damage to creditor nations than Spain leaving the euro. This is because Spain’s net international investment liabilities stood at close to €1tr as of the end of last year, almost three times as large as its Target2 liabilities. In contrast Italy’s net international investment liabilities were much smaller and stood at only €115bn at the end of last year, around a quarter of its €426bn Target2 liabilities. This, as JPM explains, is because Italy has accumulated over the years more external assets than Spain and should thus be overall more able to repay its external liabilities.

[..] Ironically, the surprisingly low net international investment liabilities of Italy are the result of the persistent current account surpluses the country has been running since the euro debt crisis of 2012, and smaller current account deficits compared to Spain before the crisis. The flipside is that the current account surplus – in theory – also makes it easier for a country like Italy to exit the euro relative to a current account deficit country. This is because the higher the current account deficit of a debtor country, the higher the cost of an exit for this country as the current account deficit would have to be closed abruptly following an exit. Most importantly, this means that as a result of Italy’s decent current account surplus, from a narrow current account adjustment point of view, its own cost of a euro exit should be relatively small.

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Merkel has weakened a lot. Italy knows it.

Angela Merkel Rules Out Debt Relief For Italy (CNBC)

German Chancellor Angela Merkel appeared on Saturday to rule out debt relief for Italy, saying in a newspaper interview that the principle of solidarity among members of the euro zone should not turn the single currency bloc into a debt-sharing union. “I will approach the new Italian government openly and work with it instead of speculating about it intentions,” Merkel told the Frankfurter Allgemeine Sonntagszeitung in an interview to be published on Sunday.

On Friday, Italy swore a populist coalition into power, ending months of political uncertainty that hit global markets in the last week. Newly designated Prime Minister Giuseppe Conte will lead Western Europe’s first anti-establishment government with the aim of cutting taxes, boosting spending on welfare and overhauling EU rules on budgets and immigration. Italy accounts for 23.4 percent of the euro zone’s public debt and 15.4 percent of the bloc’s GDP, according to Eurostat.

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Conte has a full agenda.

New Italy PM Starts Off In Shadow Of His Powerful Deputies (AFP)

Italy’s new prime minister Giuseppe Conte mostly kept quiet on his full first day in office Saturday, while his two powerful deputies took centre stage in setting the tone of the populist government’s policy. Conte, a political novice, was finally sworn in on Friday as the head of a government of ministers from the anti-establishment Five Star Movement and the far-right League, ending months of uncertainty since elections in March. But Conte was a compromise candidate between Five Star leader Luigi Di Maio and the League’s Matteo Salvini – both of whom are now his deputy prime ministers – and he will have to walk a delicate line to push through the anti-austerity and pro-security promises their populist parties campaigned on.

The 53-year-old academic also inherited a daunting list of issues from his predecessor Paolo Gentiloni, including the financial travails of companies such as Ilva and Alitalia, a Group of Seven summit in Canada and a key EU summit at the end of the month, as well as the thorny question of immigration. Immigration is the bugbear of Conte’s interior minister, Salvini, the 45-year-old leader of the anti-immigrant, anti-Islam League. Salvini announced Friday that he would visit Sicily to see the situation for himself at one of the main landing points for refugees fleeing war, persecution and famine across North Africa and the Middle East. “The good times for illegals is over – get ready to pack your bags,” Salvini said at a rally in Italy’s north on Saturday, adding however that he wants to economically assist migrants’ countries of origin.

His comments come after more than 150 migrants, including nine children, disembarked from a rescue ship late Friday in Sicily. Conte attended a military parade alongside President Sergio Mattarella on Saturday, marking Republic Day for the foundation of the Italian Republic in 1946. However the new prime minister has issued few public statements since being appointed. On Saturday he did post on Facebook that he had spoken with German Chancellor Angela Merkel and French President Emmanuel Macron and would meet the two leaders at the G7 summit, where he will be a “spokesman for the interests of Italian citizens”. Conte has also opted to keep the country’s intelligence services under his personal control.

Deputy premier Di Maio, who is serving as economic development minister, also took to Facebook, calling for “entrepreneurs to be left alone”. “Employers and employees in Italy must not be enemies,” he said, promising “I will not disappoint you”. On Saturday evening Five Star held a rally in the centre of Rome with thousands of supporters and all its ministers to celebrate “the government of change”. Di Maio told the crowd that “from today, the state is us”. Five Star’s founder, former comic Beppe Grillo, rang a bell in front of the crowd, saying the sound “marks the fracture between a world that is going away and a new one that is arriving”.

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Right. Sure.

Juncker: EU Won’t ‘Meddle’ In Italy’s Affairs (O.)

Italy, the third-largest economy in the eurozone, has a public debt second only to Greece’s and there was a negative reaction from the financial markets to the League-M5S coalition, which plans to significantly raise public spending. Juncker offered a more placatory tone, suggesting that Brussels and Berlin had learned the lessons of the Greek crisis. He also denied that the eurozone was set on a course for another economic downturn: “The Italians cannot really complain about austerity measures from Brussels. However, I do not now want to lecture Rome. We must treat Italy with respect. Too many lectures were given to Greece in the past, in particular from German-speaking countries. This dealt a blow to the dignity of the Greek people. The same thing must not be allowed to happen to Italy.”

Juncker said that the financial markets’ reaction was “irrational”: “People should not draw political conclusions from every fluctuation in the stock market. Investors have been wrong on so many occasions.” Neither of the coalition parties in the new Italian government campaigned on leaving the euro or the EU, but both have backed such calls in the past and are scathing about the rules that underpin the eurozone. Mujtaba Rahman, a former European commission and UK Treasury official who now works for consultancy the Eurasia Group, warned that as the cornerstone of the coalition government’s platform was fiscal expansion, it was liable to clash with the commission this autumn.

“Though no official estimates have been produced, independent estimates suggest the proposed measures would cost, combined, upwards of €100bn per annum, around 6% of GDP.“If the government were to propose a very expansionary budget, the commission – which provides its opinions and recommendations on member states’ draft budgetary plans – would have to reject it in September. This would be a first, and would set the stage for a real confrontation with Rome,” he said. “A significant deviation from EU-mandated fiscal targets may prompt the commission to open a new Excessive Deficit Procedure, a process designed to give the EU more power to enforce austerity on Rome. Yet the symbolism of this move would only strengthen the Italian government’s domestic standing.”

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Poker player?!

Political Bruiser Sánchez Stuns Spain To Become PM (Spain Report)

Forget about what the new socialist government’s policies are going to be, because no one really knows yet. Forget about who the new ministers are going to be, because no one really knows yet. And forget about how long this government is going to last. No one has a clue right now. What is worthy of note is how Pedro Sánchez has just crushed all of his political opponents in a week. Last Friday, the PSOE had slowly slumped to less than 20% in the polls and he was being written off by columnists and commentators. This Saturday, he will be driven to Zarzuela Palace to be sworn in as the new socialist Prime Minister of Spain [..]

Mr. Rajoy is likely not the only political leader who needs a stiff drink this weekend. Pedro Sánchez has just left Pablo Iglesias—who nine days ago thought his biggest problem was an absurd internal ballot about his new luxury home—sitting in the dust in the fight for the Spanish left. Two years ago, with the sudden appearance and meteoric rise of Podemos, Mr. Iglesias’s stated strategic goal was not to win the election but to dominate the Spanish left. He just lost that race. Pedro Sánchez has just left Ciudadanos leader Albert Rivera rabbiting on incessantly about wanting a new general election instead of the socialists “unfairly” grabbing power, because Mr. Rivera is—or was—doing rather better in the polls than the rest.

But rabbit on is all he can do for now because, just like nine days ago, in the real world Ciudadanos still only has 32 seats in Congress. And Pedro Sánchez has just left the powerful leader of the Socialist Party in Andalusia, Susana Diaz, well, in Andalusia. This might be the sweetest victory of all for the new Prime Minister, because it was she who wielded her considerable internal and establishment influence in October 2016 to oust Mr. Sánchez as leader of the PSOE, allowing Mariano Rajoy to be reappointed Prime Minister after a year of national stalemate unbroken by two general elections.

Again: Pedro Sánchez, written off by some as being too handsome to have any interesting ideas, has, somewhere along the way, learnt to execute political hit jobs that have left all of his major political opponents staggering, and sent what was a confident conservative party that had only just passed a new budget—two days previously—scurrying into opposition, wounded. In a week. Whatever happens next in Spanish politics, do not underestimate Pedro Sánchez.

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More division.

Europe: Confront Trump or Avoid a Costly Trade War (NYT)

Despite its name, the European Union is not generally a model of unity. If Mr. Trump was banking on internal division stymieing the European response, he picked an opportune moment. Britain is consumed with domestic sniping over its pending departure from the European Union, making it a bit player in these proceedings. Italy has been immersed in the operatic political drama at which it excels, only Friday swearing in a new government after inconclusive elections in March. The incoming government presents a coalition of two populist parties that have expressed disdain for the European Union and the shared euro currency, stoking fears that the bloc will be presented with a new challenge to its cohesion.

Spain just swapped governments. Germany is headed by a chastened chancellor Angela Merkel following her own lengthy struggles to form a government after elections last fall. The French president has been frustrated in his attempts to forge greater political unity within the bloc. “Europe is in disarray,” said Nicola Borri, a finance professor at Luiss, a university in Rome. “It’s even difficult to understand who is in power in Europe.” In deliberating how to respond to Mr. Trump’s tariffs, the key schism appears to run between Germany and the rest of the bloc. “I don’t think there is a unified consensus for how to deal with the Americans,” said Meredith Crowley, an expert on international trade at the University of Cambridge in England. “The Germans benefit from open markets globally, so they don’t want to throw up more barriers to free trade.”

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That’s quite the statement. What if Beijing said the same about the US?

US Wants Structural Changes To China’s Economy: Mnuchin

The United States wants trade talks in Beijing this weekend to result in structural changes to China’s economy, in addition to increased Chinese purchases of American goods, U.S. Treasury Secretary Steven Mnuchin said on Saturday. U.S. Commerce Secretary Wilbur Ross arrived in Beijing on Saturday with an interagency team of U.S. officials for talks on long-term purchases of U.S. farm and energy commodities, just days after Washington renewed its threats to impose tariffs on Chinese goods.

The purchases are partly aimed at shrinking the $375 billion U.S. goods trade deficit with China. Mnuchin, speaking at a G7 finance leaders meeting in Canada where he was the target of U.S. allies’ anger over steel and aluminum tariffs, said the China talks would cover other issues, including the Trump administration’s desire to eliminate Chinese joint venture requirements and other policies that effectively force technology transfers.

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It’s election time.

Uber’s ‘Business Is Finished’ In Turkey, Erdogan Says (R.)

Turkey’s President Tayyip Erdogan has said ride hailing app Uber is finished in Turkey, following pressure from Istanbul taxi drivers who said it was providing an illegal service and called for it to be banned. About 17,400 taxis operate in Istanbul, home to about a fifth of Turkey’s population of 81 million people, and since Uber entered the country in 2014 tensions have risen sharply. Erdogan’s statement came after new regulations were announced in recent weeks tightening transport licensing requirements, making it more difficult for drivers to register with Uber and threatening a two-year ban for violations.

“This thing called Uber emerged. That business is finished. That does not exist anymore,” he said in a speech in Istanbul late on Friday. “We have our taxi system. Where does this (Uber) come from? It is used in Europe, I do not care about that. We will decide by ourselves,” added Erdogan, who is running for re-election in three weeks. [..] Uber said that about 2,000 yellow cab drivers use its app to find customers, while another 5,000 work for UberXL, using large vans to transport groups to parties, or take people with bulky luggage to Istanbul’s airports.

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The Tories can’t wait to return to Dickens.

Britain’s Low-Paid Face Decade Of Wage Squeeze (O.)

The wages of 10 million low-paid workers have stalled for two decades and face pressure for a decade to come, according to a bleak assessment of Britain’s future jobs market. Global economic competition, automation, the shift to the gig economy and a widening regional divide will see further pressure placed on the incomes of those earning between £10,000 and £15,000, it warns. The analysis by the Centre for Social Justice (CSJ) thinktank, which is on the political right and chaired by the former Tory leader Iain Duncan Smith, also blamed a chronic national failure to boost skills and education. It will be seen as another warning to Theresa May from Conservative figures to kickstart her domestic agenda.

There have been concerns within the party that the focus on Brexit has led to inaction in other crucial areas that could hold Britain back after its exit from the European Union. The analysis, co-written by Boris Johnson’s former economic adviser and Brexit supporter Gerard Lyons, concludes that wages of those on the lowest salaries stalled long before the 2008 financial crash. It warns that the current evidence shows that most never escape a life on low pay. The centre’s support for action on low pay shows that it is now an issue of concern across the political spectrum, with automation expected to place further pressure on jobs in some low-paid sectors unless new skills and opportunities are developed.

The CSJ report states that 20% of Britain’s 33 million workers earn £15,000 a year or less, and that 50% earn no more than £23,200. Only 10% of employees, or about 3 million people, earn above £53,000 a year. Britain does not compare well with other developed nations when it comes to low pay, it states. Taking data from manufacturing, and giving the US a score of 100, Switzerland topped the table with a pay rate of 155, followed by Norway on 126, Germany on 111 and France on 97. However, the UK was much further behind, on 73.

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These people would be better off moving to Poland.

UK Universal Credit Change To Bar 2.6m Children From Free School Meals (Ind.)

Up to 2.6 million children whose parents are on benefits could be missing out on free school meals by 2022, the shadow education minister will warn. Angela Rayner will tell a GMB union conference on Sunday that the Government’s claims on school meals are “falling apart” after changes to eligibility under Universal Credit (UC). When the system was first introduced in 2013, all children of recipients – who were all unemployed – were eligible for free school meals (FSM), as they would have been under the old system. But in April the criteria was tightened based on income. In England, the net earnings threshold will be £7,400 whereas in Northern Ireland it will be £14,000.

A government technical note published in May said that if the change had not been made, “around half of all (state school) children would become eligible for FSM and the meals would no longer be targeted at those who need them the most”. It said that in 2017 around 1.1 million disadvantaged children were eligible and received a free school meal, some 14 per cent of all state-school pupils. But if the change had not been made the number of additional children who would have been eligible was between 2,300,000 and 2,600,000 by 2022.

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And that’s just one animal that we could see.

Whale Dies From Eating More Than 80 Plastic Bags (AFP)

A whale has died in southern Thailand after swallowing more than 80 plastic bags, with rescuers failing to nurse the mammal back to health. The small male pilot whale was found barely alive in a canal near the border with Malaysia, the country’s department of marine and coastal resources said. A veterinary team tried “to help stabilise its illness but finally the whale died” on Friday afternoon. An autopsy revealed 80 plastic bags weighing up to 8kg (18lb) in the creature’s stomach, the department added. People used buoys to keep the whale afloat after it was first spotted on Monday and an umbrella to shield it from the sun. The whale vomited up five bags during the rescue attempt.

Thon Thamrongnawasawat, a marine biologist and lecturer at Kasetsart University, said the bags had made it impossible for the whale to eat any nutritional food. “If you have 80 plastic bags in your stomach, you die,” he said. Thailand is one of the world’s largest users of plastic bags. Thon said at least 300 marine animals including pilot whales, sea turtles and dolphins, perished each year in Thai waters after ingesting plastic. “It’s a huge problem,” he said. “We use a lot of plastic.” The pilot whale’s plight generated sympathy and anger among Thai netizens. “I feel sorry for the animal that didn’t do anything wrong, but has to bear the brunt of human actions,” wrote one Twitter user.

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