The Catalan Question and the Future of Europe

It is 5 AM in Lisbon, and I am sitting in an airport lounge with wifi, writing this week’s OTB on my iPad, clumsily. GaveKal has written a very candid analysis of the Catalonia vote/debacle, which was a hot topic at the conference where I was speaking – Spain is right next door. There were numerous past and current foreign ministers and other parliamentary leaders here, all very pro-EU, and they were aghast at Rajoy’s heavy-handed response.
Howewver, they all agreed that Catalonia could never be recognized as a new country in the EU, as this week’s OTB notes. Allowing Catalonian independence would fuel the flames of the numerous separatist movements all over Europe and disintegrate the movement to a closer EU – something that all here agreed would be a bad thing. Remember, Catalonia is much bigger than Greece – it’s 20% of the Spanish economy and Spain’s strongest region. Not a small deal. But I think the outcome will be a deal like the Basques got – more independence, and they get to keep more of their tax revenue. But the referendum was a great negotiating tactic. And Rajoy, with his clumsy police action, actually gave the separatists the upper hand.
I may at some point write a full letter on what I heard at this confernce. There were some very different viewpoints than you hear in the US (even from my close friend George Friedman). When you spend a great deal of time with Jean-Claude Trichet, former president of the ECB (who was extraordinarily polite and gracious) and hear him advocate for a stronger European NATO, and hear as well from far-left German Politician Joschka Fischer, who also espoused a hard line against Russia and China and a stronger NATO – almost sounding like Trump – you wonder what rabbit hole you have fallen down. Herr Minister Fischer was however not amused when I pointed out the similarity between his views and Trump’s. He swears he has no interest in ever being a politician again. But his talk, which I oddly found myself agreeing with much of, certainly sounded like a stump speech. My new friend may have protested his reluctance too vigorously. Oddly, the greatest disagreement I stumbled into was with a fellow American who is a friend of Hillary. Which made for a couple very lively dinner debates – which I hoped amused our hosts.

This post was published at Mauldin Economics on OCTOBER 4, 2017.

North Korea Fires Multiple Ballistic Missiles

The day before “Berserker Thursday” with its UK elections, Comey testimony and the ECB decision, was supposed to be quiet. Instead we had the first domestic Iran terrorism in decades, Iran vowing revenge on Saudi Arabia, rising Qatar crisis tensions, South Korea telling the US it can go to hell, Syria threatening to strike US forces, the biggest crude crash in months, Germany pulling out of Turkey, Turkey approving the deployment of troops to Qatar, and stocks of course finishing the day higher.
And now, to top it all off, moments ago North Korea fired not one but multiple ballistic missiles, confirming the earlier story from Japan’s Asahi.
" – , "(2) 4 # #
— – (@yonhaptweet) June 7, 2017

This post was published at Zero Hedge on Jun 7, 2017.

ECB’s First Chief Economist Warns – The EU is a ‘House of Cards’

None of the following about the EU will come as a surprise to most of you, but the language used by Otmar Issing is nevertheless pretty remarkable.
The Telegraph reports:
The European Central Bank is becoming dangerously over-extended and the whole euro project is unworkable in its current form, the founding architect of the monetary union has warned.
‘One day, the house of cards will collapse,’ said Professor Otmar Issing, the ECB’s first chief economist and a towering figure in the construction of the single currency.
Prof Issing said the euro has been betrayed by politics, lamenting that the experiment went wrong from the beginning and has since degenerated into a fiscal free-for-all that once again masks the festering pathologies.
‘Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly,’ he told the journal Central Banking in a remarkable deconstruction of the project.

This post was published at Liberty Blitzkrieg on Oct 17, 2016.

Negative Retail Interest Rates Have Arrived in Germany

I only have three words in response to the following article.
Gold. Silver. Bitcoin.
Bloomberg reports:
When the European Central Bank introduced a negative interest rate on lenders’ deposits two years ago, few thought things would ever go this far.
This week, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee – population 5,767 – said it’ll start charging retail customers to hold their cash. From September, for savings in excess of 100,000 euros ($111,710), the community’s Raiffeisen bank will take back 0.4 percent. That’s a direct pass through of the current level of the ECB’s negative deposit rate.

This post was published at Liberty Blitzkrieg on Michael Krieger | Posted Friday Aug 12, 2016.

Frontrunning: July 19

Turkey’s Erdogan recounts night of coup, mulls death penalty (AP) Dissidents Silenced, GOP Convention Turns Attacks on Clinton (WSJ) U. S. police deaths build momentum for law to treat attacks as hate crimes (Reuters) Police across US patrolling in pairs after ambush attacks (AP) UK will not invoke EU Article 50 this year, government lawyer says (Reuters) EU State-Aid Rules for Banks in Crisis Backed by Top Court (BBG) Islamic State flag found in room of German train attacker (Reuters) Fed Officials Gain Confidence They Can Raise Rates This Year (WSJ) Document Shows Less Limits on Iran Nuke Work (AP) Daimler, DAF, Others Fined Record $3.2 Billion for European Truck Cartel (Handesblatt) In some U. S. cities, police push back against ‘open-carry’ gun laws (Reuters) ECB Fast Exhausting German Bonds for QE Buying as Yields Tumble (BBG) Startup Deal Activity Keeps Falling Worldwide (BBG) Turkey Central Bank Cuts Overnight Lending Rate to 8.75 Percent (BBG) Singapore Exchange Blames Faulty Disk for Market’s Trading Halt (BBG) Facebook to Pay Internet Stars for Live Video (WSJ) Dad’s Tape Could Jail Banker Son Accused of Offering Stock Tips (BBG) Russian Consumers Still in Shock as They Cut Back on Food and Medicine (BBG) Overnight Media Digest
– On the first night of Donald Trump’s convention, Republicans assailed Hillary Clinton for the 2012 attack on Benghazi, illegal immigration and recent killings of police officers – hours after hundreds of delegates shouting for a roll-call vote to disrupt his forthcoming nomination and one state delegation walked off the floor.– A core of alleged coup plotters were charged on Monday as Turkish President Recep Tayyip Erdogan threatened judicial vengeance against them.

This post was published at Zero Hedge on Jul 19, 2016.

Hillary Clinton To Face FBI Interview Within Weeks, CBS Reports

As we reported yesterday, just when Hillary thought the email scandal was behind her, and she could shift her focus to the newly minted GOP presidential nominee Donald Trump, an order by Judge Emmet Sullivan of the U. S. District Court decided to lay out ground rules for interviewing multiple State Department officials, and ordered at least six current and former State Department employees to answer questions, allin an effort to finish the depositions in the weeks before the party nominating conventions.
On the heels of interviewing Hillary Clinton’s top personal aide Huma Abedin, as we detailed previously, it appears The FBI is finally ready to go after the Emailer-in-chief herself…
Source confirms to @CBSNews Hillary Clinton to be interviewed by the FBI within the coming weeks in the e-mail server investigation.
— Charlie Kaye (@CharlieKayeCBS) May 6, 2016

This post was published at Zero Hedge on 05/06/2016.

ECB blames you for negative interest rates

Just after sunrise on April 19, 1775, a large contingent of British military troops arrived to the town of Lexington, Massachusetts.
They were under orders to search for and confiscate all weapons and munitions from the colonials – something the British army had done countless times before.
In many ways it was a routine operation. And yet, that morning, roughly 80 local militiamen stood blocking their path.
Paul Revere had ridden through Lexington only hours before to warn residents of the approaching threat.
There was a lot of yelling and tension between the two sides, and amid all the confusion, someone fired his musket. Then another. Then another.
(Historians are still unclear which side shot first, though much of the evidence points to Han Solo.)
And though few people realized it at the time, those turned out to be the opening shots of the American Revolution.

This post was published at Sovereign Man on May 3, 2016.

The ECB and shadow banking

Markets have fully adjusted to a financial world which reflects the leadership and management of money by central banks, and are increasingly frightened of any prospect of their control failing.
Every time the system stumbles, the response has been for central banks to force greater control and regulation upon the monetary system to the detriment of free markets. It is the financial version of the Road to Serfdom. Central banks have become ill-equipped to allow markets to price risk, and in the case of the ECB, it is downright hostile to market-determined prices.
The ECB is a creature of the EU. The EU super-state has legal primacy over the consumer in determining consumer, market and monetary affairs. I was alerted to the full implications of this fact when I recently chaired a presentation of a remarkable paper written by a barrister, Ben Wrench, sponsored by the Institute for Direct Democracy in Europe. Wrench’s paper is worth reading to appreciate its full implications, and it can be found on the IDDE’s website.
He describes EU citizens as being subject to rule by law. Unelected representatives legislate and regulate whatever they wish, and democratically elected representatives have no right to challenge them. This is why referendums and parliamentary votes are ignored, because they have no right of challenge in law. This contrasts with the UK’s rule of law, whereby everyone, including the state, has to abide by laws and regulations decided by democratically elected representatives.
On the EU mainland, the Code Napolon applies, where the underlying legal approach is that everything is illegal unless it is permitted by law. The UK’s laws are diametrically opposed, because everything is permitted unless it has been made specifically illegal. The EU is all about the primacy of the state over the people, while in the UK the basis is one of laissez-faire. This is the difference between rule by law and the rule of law.

This post was published at GoldMoney on APRIL 14, 2016.

The ECB’s Insane Monetary Policy is Creating a Rush Into Derivatives

One of the most catastrophic things central banks have done in the post financial crisis period is destroy financial markets. Investors are no longer investors, they’re merely helpless rats running around the lunatic central planning maze desperately attempting to survive by front running the latest round of central bank purchases.
While actual macroeconomic and corporate fundamentals do still exert influence on financial asset prices from time to time, the far bigger driver of performance over the past several years is central bank policy. To understand just how destructive this is, recall what we learned in last month’s post, Japan’s Bond Market is One Gigantic Joke – ‘No One Judges Corporate Credit Risks Seriously Anymore’:
TOKYO – Fixed-income investors in Japan are increasingly assessing bonds based on their likelihood of being bought by the central bank, rather than the creditworthiness of the issuers.
Still, the fund manager desperately wanted to get hold of the bond because he bets that debt issued by Mitsui and other trading houses will be picked up by the Bank of Japan in its bond purchase program. Even if an investor buys a bond with a subzero yield, the investor could sell it to the central bank for a higher price, the thinking goes.
‘It goes to show that no one judges corporate credit risks seriously anymore,’ said Katsuyuki Tokushima at the NLI Research Institute.
As insane as it may be, investors now acknowledge that fundamental analysis is merely an afterthought when compared to the far bigger influence of central bank buying. While this destroys free markets, fuels malinvestment bubbles and rewards cronyism, it doesn’t stop central planners – it merely emboldens them. The latest example of such hubris was on full display last month when the ECB’s Mario Draghi increased QE by a third. Here’s some of what’s happened since.

This post was published at Liberty Blitzkrieg on Apr 5, 2016.

Yanis Varoufakis Issues a Major Warning to the Greek People

Varoufakis said that Schuble, Germany’s finance minister and the architect of the deals Greece signed in 2010 and 2012, was ‘consistent throughout’. ‘His view was ‘I’m not discussing the program – this was accepted by the previous [Greek] government and we can’t possibly allow an election to change anything.
‘So at that point I said ‘Well perhaps we should simply not hold elections anymore for indebted countries’, and there was no answer. The only interpretation I can give [of their view] is, ‘Yes, that would be a good idea, but it would be difficult. So you either sign on the dotted line or you are out.”
– From last year’s post: Everything You Need to Know About the Greek Crisis and ECB Fascism in Two Paragraphs
By now, most of you have heard about Wikileaks’ release of internal deliberations between the top two IMF officials in charge of managing the Greek debt crisis – Poul Thomsen, the head of the IMF’s European Department, and Delia Velkouleskou, the IMF Mission Chief for Greece.

This post was published at Liberty Blitzkrieg on Monday Apr 4, 2016.

RANsquawk Week Ahead Video: Focus remains on China while ECB and BoC rate decisions loom

The rocky start to 2016 continued last week, with oil one of the key centre points as the commodity looks close to freefall, while equities and commodity linked currencies also saw continued downside. In terms of where the focus this week will lie, further attention will likely fall on China. With the softening of the CNY appearing, at least temporarily, to have been halted, attention will instead move to the equity markets to see what the PBoC do, if anything, to stem the outflows in the indices. Oil will also remain in focus, with the USD 30/bbl level now broken. Some commentators noted that USD 30 may be a floor for OPEC and be the catalyst that the cartel needed to call an emergency meeting to cap production. However, with the sanctions against Iran now lifted and tensions between OPEC nations at a high level, there are no immediate signs of an emergency OPEC meeting and a halt to the downside in oil.

This post was published at Zero Hedge on 01/18/2016.

Thanksgiving amid the Threats

Lament for a Vanished Middle East Cumberland: Barriers Rising Gavekal: Expensive War Coming Refugee Economics Inside ISIS The Threat Is Here Hong Kong, Hollywood (Florida), and the Cayman Islands
‘Nobody in Europe will be abandoned. Nobody in Europe will be excluded. Europe only succeeds if we work together.’ – Angela Merkel, December 15, 2010
‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough.’ – Mario Draghi, July 25, 2012
‘We have to safeguard the spirit behind Schengen,’ Mr Juncker told the European Parliament on Wednesday. ‘Yes, the Schengen system is partly comatose. But .’.’. a single currency does not exist if Schengen fails. It is one of the pillars of the construction of Europe.’ – London Telegraph, November 25, 2015
We all have great cause for gratitude this Thanksgiving weekend, whether or not you celebrated that holiday in your home country. In the last month we have seen how violence can touch people far from the battlefields. If your only connection to the recent terrorist events came through watching the news, count yourself lucky. Others can only wish they had such distance.
Many have made comparisons with 9/11 these past two weeks. History never repeats itself quite so neatly, of course, but I too sense that we are poised at an inflection point. Significant events at different places around the globe seem to be converging. I suppose we will look back someday and be able to see clearly the connections among them. For now, we can only try to understand.
I think the entire situation in the Middle East, the refugee crisis, and the present state of the European Union have to be placed in a greater context if we are to understand what the confluence of these vastly different sociopolitical rivers will mean for the future of our economy and investments. I think we are coming to a period of time when geopolitical concerns, always on my radar, are going to require more attention. This has been apparent to me for some time, and I’ve been working to position Mauldin Economics to help you stay abreast of global developments. We will be making what I think you will find to be immensely helpful announcements in the immediate future.
But for today, in this week’s letter, I’m going to let other people do most of the talking. I gave you my own thoughts on the Paris attacks and Europe’s future last week in ‘The Economic Impact of Evil.’ Today I’ll share some of the most interesting post-Paris analysis that has crossed my path over the last two weeks.

This post was published at Mauldin Economics on NOVEMBER 27, 2015.

Putin Nuke War Warning, Clinton Benghazi Terror Lie, MSM False Narrative

The following video was published by Greg Hunter on Oct 22, 2015
Vladimir Putting is worried that the chances of a wider global war are increasing and not decreasing. At a global conference discussing war and peace prospects, Putin said, ‘We had the right to expect that work on development of US missile defense system would stop. But nothing like it happened, and it continues. This is a very dangerous scenario, harmful for all, including the United States itself. The deterrent of nuclear weapons has started to lose its value, and some have even got the illusion that a real victory of one of the sides can be achieved in a global conflict, without irreversible consequences for the winner itself – if there is a winner at all.’
Russia is stabilizing the Assad regime in Syria. Russia war planes have been pounding the so- called Syrian rebels and, for the most part, the U. S. is going along with it. The U. S. and Russia have set a deal that will ensure there will be no accident in the air between the two countries in the skies over Syria. Meanwhile, the battle for Aleppo in Syria is raging. Without airpower, the probability of victory for the rebels is dim. This doesn’t mean everything will be over soon, quite the contrary. Saudi Arabia and every other Sunni Muslim country is vowing to send more resources against Iran and Hezbollah, who are providing most of the foot soldiers in the Syrian war. The latest country to threaten to get involved militarily is Qatar. Why is this important? The U. S. has a military base in Doha. If Qatar goes on the offensive in Syria, it leaves them open to attack. Of course, that could involve the U. S.
Hillary Clinton testified in the Benghazi hearings on Capitol Hill, and my take on Ms. Clinton’s testimony is security was not her job. She is not responsible for the death of four Americans. It was a highly partisan hearing. It did reveal a stunning new fact, and that was Clinton herself, while Secretary of State on the night of the 9/11/12 attack and the day after, said it was ‘al-Qaeda related’ and ‘had nothing to do with the (anti-Islamic) film.’ In her own words, she knew it was a terror attack right from the beginning and lied with the Obama Administration to the world.
Finally, the economy is tanking and, yet, the stock market is in rally mode. The headlines are awful week after week, and that is good news for the markets. Traders think the Fed will be forced not to raise rates, especially with the ECB hinting at more money printing and negative interest rates. Gregory Mannarino of says this rally won’t last, and it is being propped up with ‘financial wizardry.’

Yanis Varoufakis on ‘Europe’s Vindictive Privatization Plan for Greece’

A man in debt is so far a slave. – Ralph Waldo Emerson
The one silver lining to emerge from Yanis Varoufakis’ resignation as Finance Minister of Greece, is his ability and willingness to come out and bluntly tell everybody the truth about what happened behind closed doors as Greece was put into conservatorship.
I highlighted one example of this last week in the post, Everything You Need to Know About the Greek Crisis and ECB Fascism in Two Paragraphs, in which we learned that:
Varoufakis said that Schuble, Germany’s finance minister and the architect of the deals Greece signed in 2010 and 2012, was ‘consistent throughout’. ‘His view was ‘I’m not discussing the program – this was accepted by the previous [Greek] government and we can’t possibly allow an election to change anything.
‘So at that point I said ‘Well perhaps we should simply not hold elections anymore for indebted countries’, and there was no answer. The only interpretation I can give [of their view] is, ‘Yes, that would be a good idea, but it would be difficult. So you either sign on the dotted line or you are out.”

This post was published at Liberty Blitzkrieg on Jul 21, 2015.

Everything You Need to Know About the Greek Crisis and ECB Fascism in Two Paragraphs

Yanis Varoufakis just sat down for his first interview since resigning as Finance Minister of Greece. He talked frankly with Harry Lambert of the New Statesman. Here are the two most important paragraphs from the transcript.
There is no democracy in Europe. None.
Varoufakis said that Schuble, Germany’s finance minister and the architect of the deals Greece signed in 2010 and 2012, was ‘consistent throughout’. ‘His view was ‘I’m not discussing the programme – this was accepted by the previous [Greek] government and we can’t possibly allow an election to change anything.
‘So at that point I said ‘Well perhaps we should simply not hold elections anymore for indebted countries’, and there was no answer. The only interpretation I can give [of their view] is, ‘Yes, that would be a good idea, but it would be difficult. So you either sign on the dotted line or you are out.”
Any questions?

This post was published at Liberty Blitzkrieg on Jul 13, 2015.

Ukraine Halts Russian Gas Purchases After Price Talks Fail

It has been a bad day for deals and deadlines all around: first Greece is about to enter July without a bailout program and in default to the IMF with the ECB about to yank its ELA support or at least cut ELA haircuts; also the US failed to reach a nuclear deal with Iran in a can-kicking negotiation that has become so farcical there is no point in even covering it; and now moments ago a third June 30 “deal” failed to reach an acceptable conclusion when Russia and Ukraine were unable to reach an agreement on gas prices at talks in Vienna on Tuesday. As a result, Ukraine is suspending its purchase of Russian gas.
According to RT, Russian Energy Minister Aleksandr Novak and Ukraine’s Energy and Coal Minister Vladimir Demchishin both admitted to reporters that the negotiations had born no fruit. Demchishin added that there would be a new round of talks in September.

This post was published at Zero Hedge on 06/30/2015.

U.S. Preparing For War In Ukraine And Syria Which Might Lead To WWIII – Episode 688

The following video was published by X22Report on Jun 8, 2015
Greece rejects an extension proposal by the ECB. Euro zone sentiment declines. The youth of America having a tough time saving up for a home. Home down payments hit a three year low. TISA is another secret trade deal. Poroshenko signs the martial law bill into law. Obama trying to convince everyone that the sanctions are working against Russia, proposes more sanctions. US looking to put nuclear weapons in England. Obama says US has no strategy, he cannot reveal the real strategy of removing Assad. Syrian Electronic Army which most likely is the NSA, attacks the US military site. This is a build up to go to war with Assad. Ukraine and Syria are now in the cross-hair of the US and the US is now preparing for war which could lead to WWIII.

Did The US Department Of Justice Just Do Vladimir Putin A Great Favor

Last year, in the aftermath of the western-mediated Ukraine presidential coup and subsequent proxy civil war between Russia and NATO countries, the US imposed sanctions, largely over the complaints of the German business lobby, on Moscow which did little to dent the Russian economy but crippled European exports to such a degree that a few months later the continent was on the verge of a triple dip recession which in turn paved the way for the ECB’s QE.
That is not to say Russia was spared: Russia’s economy was also substantially impacted but not by US “costs”, since unlike the US, financial markets in Russia are a fraction of the size and importance they are in the west, but by the collapse in oil prices. It took US some 6 months to realize that for a commodity exporting powerhouse such as Russia, sanctions are meaningless, but crush the price of its main export and suddenly everything changes.
This was the basis for various rounds of “secret” talks between John Kerry and Saudi Arabia: to punish Russia by lowering the price of oil, which also ended up smothering not only US shale production but the most vibrant part of the US economy, and its job creation dynamo, the state of Texas.
Furthermore, the Russian economy had also been weakened recently by the Winter Olympics in Sochi, which may have been the grand spectacle Putin wanted to put on, but it came at a cost: the final bill is said to have topped $50 billion, much more than originally planned, although oil was still well above $100, in line with what had been Russia’s budgeted oil price for 2015-2017.
Which is why in retrospect, the DOJ’s crackdown against FIFA in general, and the Russian World Cup of 2018 in particular, may have been just the blessing in disguise that Putin, who whether he likes it or not has been forced to hunker down in cash conservation mode, wanted.

This post was published at Zero Hedge on 06/04/2015.

Illinois Man Commits Suicide in Front of U.S. Capitol Holding a ‘Tax the 1%’ Sign

This. Is. Sparta!

Yesterday, 21-year old Josephine Witt captured the world’s attention (and much of its admiration) for interrupting a press conference being held by the European branch of the global central banking cartel, by sprinkling confetti all over ECB crime boss Mario Draghi. What was equally important, but didn’t make the headlines, was that just days earlier a 22-year old Illinois man committed suicide in front of the U. S. Capitol while holding a sign that said: ‘Tax the 1%.’
His death seems to have been, in part at least, a political statement, and people should pay attention. While I don’t doubt the sincerity of his beliefs, I am troubled by the simplicity of the message on his sign because it reminds me of a phony political slogan. It likely demonstrates a deep ignorance of how the financial system actually works, and how the super rich exercise economic and political dominance.
While the tax code is absurdly complicated in a manner that is certainly intended to benefit the rich who have the resources and incentive to take advantage of it and lobby for loopholes, this is not the source of financial oligarch power. Central banking on the other hand is.

This post was published at Liberty Blitzkrieg on Apr 16, 2015.