Thursday, 9 February 2017

Europe’s Dying.

Baltic Dry Index. 702 -12   Brent Crude 55.38

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.

Walter Bagehot. Lombard Street. 1873

Forget the rump-EU’s troubles with Brexit. Italy, France, Greece, or Spain’s Catalan’s, all have issues that might bring down the EUSSR as it celebrates its 60th year of sclerotic bureaucracy.  Brussels having planned for a warm winter despite a clear Siberian snow signal suggesting otherwise, with no mitigating El Nino in the Pacific, European energy cooperation died as a severe winter hit, and Europe had to rely on the kindness of Russians.

In 2017, wherever one looks at the wealth and jobs destroying EUSSR, there’s a picture of rising disenchantment with the status quo, the euro, and Merkel’s Migrant Madness. The Flu struck EU, is just one sneezing fit away from flying apart. Continental Europe badly needs root and branch reform to survive as a German run economic zone, but there absolutely no sign of any will on the continent to reform.  President Trump’s proposed Border Access Tax, if it happens, will likely pull the trigger on an unreformed rump-EU.

The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards.

Walter Bagehot.

Out of pocket, Italians fall out of love with the euro

Wed Feb 8, 2017 | 1:45am EST
When the Italian central bank's deputy governor joined a radio phone-in show last week, many callers asked why Italy didn't ditch the euro and return to its old lira currency.
A few years ago such a scenario, that Salvatore Rossi said would lead to "catastrophe and disaster", would not have been up for public discussion.
Now, with the possibility of an election by June, politicians of all stripes are tapping into growing hostility towards the euro. Many Italians hold the single currency responsible for economic decline since its launch in 1999.
"We lived much better before the euro," says Luca Fioravanti, a 32-year-old real estate surveyor from Rome. "Prices have gone up but our salaries have stayed the same, we need to get out and go back to our own sovereign currency."
The central bank is concerned about the rise in anti-euro sentiment, and a Bank of Italy source told Reuters Rossi's appearance is part of a plan to reach out to ordinary Italians.
Few Italians want to leave the European Union, as Britain chose to do in its referendum last year. Italy was a founding EU member in 1957 and Italians think it has helped maintain peace and stability in Europe.
And the ruling Democratic Party (PD) is pro-euro and wants more European integration though it complains that the fiscal rules governing the euro are too rigid.
But the three other largest parties are hostile, in various degrees, to Italy's membership of the single currency in its current form.
The PD is due to govern until early 2018, unless elections are called sooner. The PD's prospects of victory have waned since its leader Matteo Renzi resigned as premier in December after losing a referendum on constitutional reform, and polls suggest that under the current electoral system no party or coalition is likely to win a majority.
Italians used to be among the euro's biggest supporters but a Eurobarometer survey published in December by the European Commission showed only 41 percent said the euro was "a good thing", while 47 percent called it "a bad thing."
In the Eurobarometer published in April 2002, a few months after the introduction of euro notes and coins, Italy was the second most pro-euro nation after Luxembourg, with 79 percent expressing a positive opinion.
Italy is the only country in the euro zone where per capita output has actually fallen since it joined the euro, according to Eurostat data. Its economy is still 7 percent smaller than it was before the 2008 financial crisis, and youth unemployment stands at 40 percent.

The Plan to Stop French Raiders Buying Up Italian Businesses

by Marie Mawad, Alexandre Boksenbaum-Granier, and John Follain
8 February 2017, 02:03 GMT
In the corporate suites of Milan and Rome’s corridors of power there’s a new resolve: stop French raiders from buying up Italian businesses.

After a spate of Italian takeovers by French competitors, some of the brewing resentment in the country will be felt by Vivendi SA in its fight for power at Mediaset SpA and Telecom Italia SpA, said people familiar with the matter. French companies announced $41.8 billion in Italian takeovers in the last five years, including Essilor International SA’s recent accord to buy Luxottica and Amundi SA’s acquisition of UniCredit SpA’s Pioneer Investments, according to Bloomberg-compiled data, six times Italian purchases in France.

Italian authorities are focusing their efforts on the few areas in which they can intervene, using regulatory pressure or board-seat influence to curb the French corporate offensive, the people said, asking not to be named discussing private considerations. For their part, Italian executives like Intesa Sanpaolo SpA Chief Executive Officer Carlo Messina are being more vocal about opposition to their neighbor’s onslaught.

“We are a company that speaks Italian, not French, and we are defending our Italian-ness,” Messina said at an event on Jan. 26 in Turin. “Someone who defends Italian-ness and does it in French makes me laugh.”

Messina’s bank is mulling a merger with insurer Assicurazioni Generali SpA. His comments came after Generali named a Frenchman at its helm, and amid speculation French insurance giant Axa SA is a possible rival Generali acquirer.

In the near term, the emerging nationalistic streak may get in the way of French billionaire Vincent Bollore’s ambition to create a European media giant. Bollore is the biggest shareholder of French media company Vivendi SA, which is the largest holder of Telecom Italia and the second-largest owner of Milan-based Mediaset. In the past year or so, Bollore’s fight for power at Telecom Italia and Mediaset has raised Italian ire.

At the end of last year, a memo was circulated among Italian government officials about the possibility of using veto power against Vivendi in case of a potential takeover of Mediaset, a person familiar with the matter said.

There was also talk of extending this to Telecom Italia if there was evidence that the French company would use its stake in the telecommunications company to influence the Mediaset situation, the person said. The Italian competition watchdog Agcom may also weigh in, the person said. Vivendi declined to comment. The Italian government maintains that it doesn’t interfere in private sector deals.

Monte Paschi’s Debt Hangover: Vineyards in Tuscany It Can’t Sell

Italian lender poured millions into Tuscan farms, vineyards.
by Luca Casiraghi and Chiara Albanese 9 February 2017, 05:01 GMT

The abandoned farmhouse surrounded by acres of prime Tuscan vineyards, known as the Aquilaia estate, stands as a monument to failure—to the tens of billions of euros in bad loans that sank the world’s oldest bank.

Born at about the same time as Michelangelo, Banca Monte dei Paschi di Siena crumbled under the weight of a lending binge whose legacy has become the headache of Italian taxpayers after the government said in December it would take it over.

While the bank says it has already accounted for much of the potential losses, skeptics say the signs aren’t promising.

“It’s very likely that Monte Paschi will need more help to fix its issues,” said Pierluigi Piccini, 64, a former mayor of Siena and a former manager at the bank in Paris, while sipping coffee near Piazza del Campo, the iconic square where the horse race known as Palio is held twice a year. “The worst is yet to come.”

A spokeswoman for Monte Paschi declined to comment on the loans and the value of the underlying assets.

Even in a country whose banks hold almost €360 billion ($388 billion) of nonperforming loans—about €6,000 per person—Monte Paschi stands out. Almost 35 percent of all its loans were deemed to bestressed in June, according to data compiled by PricewaterhouseCoopers.

After the bank's 1999 initial public offering, Monte Paschi’s net loans almost tripled to a peak of €155 billion in 2010.

With that—and notwithstanding state aid in 2009 and 2013—its gross nonperforming assets increased sevenfold in the past decade, to €47 billion at the end of 2015.

Winter Freeze Exposes Soft Underbelly of EU’s Energy Union Goal

by Ladka Mortkowitz Bauerova
As freezing weather triggered energy shortages across southeast Europe at the start of the year, Bulgaria’s refusal to export power was typical in a region where everyone had to fend for themselves.

Nations from Greece to Hungary hoarded power last month in response to the coldest winter in a decade, exposing the weakness of the region’s power markets, which should enjoy unrestricted flows. Temperatures in the Balkans and surrounding countries are expected to drop below freezing again next week.

The reaction highlights the European Union’s struggle to break down national barriers for power and gas, integrate markets and bolster energy security as it tries to ease dependence on Russian fuel. While many southeast European countries are in the EU, they have been slow to modernize plants and cables in a region where assets per person for production and infrastructure are about a third of that in advanced Europe, according to the International Monetary Fund.

“What I see in the Balkans is clear evidence that everybody first secures its own consumption and only then, if they’re in a position to do so, they’ll help the others,’’ said Andras Totth, the deputy chief executive officer of strategy at Hungarian state-controlled utility MVM.

January’s cold snap crippled supplies in a region dominated by coal-fired generation and hydropower, cutting electricity to tens of thousands of homes and sending energy prices to record levels. Greece cut power exports for two days, while Romania restricted flows as rivers froze and one of its nuclear reactors was forced to halt after a blizzard damaged the high-voltage line connecting it to the grid.

----Bulgaria, which normally exports more than 10 percent of its electricity, curtailed outflows for almost a month until Feb. 9. The disruption is being reviewed by the EU, which said it’s meeting with Bulgaria next week over whether the country broke any of the bloc’s rules.

Bulgaria fully complied with the nation’s energy laws and has “no concerns for now” about the EU’s review, Petyo Ivanov, the chief executive officer of state-owned Bulgarian Energy Holding, told reporters in Sofia on Wednesday. The country will respond to EU questions it receives officially, he said.

EU faces crisis as IMF warns Greek debts are on ‘explosive’ path 

Tim WallaceSzu Ping ChanPeter FosterSteven Swinford
7 February 2017 • 9:00pm
he EU faces a looming crisis which could threaten the sustainability of the eurozone as the International Monetary Fund has warned Greece’s debts are on an “explosive” path despite years of attempted austerity and economic reforms.

Global financiers at the IMF are increasingly unwilling to fund endless bailouts for the eurozone’s most troubled country, passing more of the burden onto the EU - at a time when Germany does not want to keep sending cash to Athens.

The assessment opens up a fresh split with Europe over how to handle Greece’s massive public debts, as the IMF called on Europe to provide “significant debt relief” to Greece - despite Greece’s EU creditors ruling out any further relief before the current rescue programme expires in 2018.

Jeroen Dijsselbloem, the Eurogroup President repeated that position last night, saying there would be no Greek debt forgiveness and dismissing the IMF assessment of Greece’s growth prospects as overly pessimistic.

"It's surprising because Greece is already doing better than that report describes," said Mr Dijsselbloem, who chairs meetings of eurozone finance ministers, adding that Greece was on track for a “pretty good recovery at the moment”.

The renewed divisions over how to handle the Greek debt crisis has raised fresh questions over whether the IMF will be a full participant in the next phase of the Greek rescue - a key condition for backing from the German and Dutch parliaments.

As Angela Merkel, the German chancellor, fights a tough reelection battle, Germany is particularly reluctant to send funds directly to Greece, with populist parties in Germany arguing that the payments amount to an unfair bailout from hard-working Germans to less deserving Greeks.
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Alan Schwartz, CEO Bear Stearns, March 12, 2008. Bust March 16, 2008.
At the Comex silver depositories Wednesday final figures were: Registered 30.20 Moz, Eligible 150.67 Moz, Total 180.87 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today Italy cheating. Why am I not surprised.

Q. How does an Italian get into an honest business?

A. Usually through the skylight.

Exclusive: Italian diesel probe omitted key tests for Fiat Chrysler models

Tue Feb 7, 2017 | 4:51pm EST
Fiat Chrysler (FCHA.MI) vehicles were allowed to skip key tests for illegal engine software during Italy's main emissions-cheating investigation in the wake of the Volkswagen scandal, according to the transport ministry's own report.

The report, presented to a European parliamentary committee in October but never officially published, will be seized upon by environmental groups pressing MEPs to vote on Thursday for tougher EU oversight of vehicle testing by national authorities.

"It's imperative that we break this cosy relationship between national testing authorities and their domestic carmakers," said Julia Poliscanova, a vehicle emissions specialist at Brussels-based campaign group Transport & Environment. "This problem is at the heart of Dieselgate."

The Italian report may raise questions for Fiat Chrysler (FCA) as it faces a U.S. criminal investigation for alleged emissions manipulation and German accusations that it, like VW (VOWG_p.DE), used "defeat devices" to confound nitrogen oxide (NOx) tests.

FCA on Monday became the third carmaker after VW and Renault to be referred to French prosecutors over the scandal. The Italian-American company denies breaking any laws, a spokesman reiterated, declining further comment.

The ministry findings, which have been circulated by some Italian opposition politicians and examined by Reuters, include complete sets of data for eight diesel cars made by BMW (BMWG.DE), Ford (F.N), Mercedes (DAIGn.DE), Volkswagen and GM's (GM.N) Opel.

But for three of the seven FCA models also investigated - a Jeep Cherokee 2.0, Alfa Romeo Giulietta 1.6 and Lancia Ypsilon 1.3 - results are missing from an on-road measurement phase and a reversed version of the EU's standard "NEDC" lab test.

All seven FCA models also lack data for an "Artemis" test that adjusts the EU lab regime to reflect urban driving styles. The three skipped protocols are typically used to help unmask defeat devices by preventing them from detecting the test.

No explanation for the missing FCA results was offered in the document.

Q. How come Italian's don't like Jehovah witnesses?

A. They don't like any witnesses.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

The state of residential solar power

Choosing solar in a vacuum now makes sense—but location and bureaucracy still loom IRL.

Lee Phillips - 2/5/2017, 2:00 PM
Don't panic, but we will need to generate approximately 15TW of usable energy from renewable (carbon-neutral) sources by 2050 in order to stabilize the atmospheric CO2 concentration. And purely in terms of available energy, solar power has the greatest potential for meeting this requirement.

Solar is “probably the only long-term supply-side energy solution that is both large enough and acceptable enough to sustain the planet’s long term requirements,” according to Richard Perez, senior research associate at the Atmospheric Sciences Research Center at SUNY-Albany. Perez’ analysis includes geothermal, wind, all other significant renewable sources, nuclear fission, and all forms of fossil fuels.

So while wind, hydropower, and geothermal extraction may work well on a local or regional scale in certain areas, today the potential of solar exceeds any other renewable energy source by several orders of magnitude. It’s simply the only contender, besides nuclear power, for a global solution to supply civilization with the massive amount of energy it demands.

On average, the power from the Sun striking the Earth’s surface is 175 W/m2. If we assume that 10 percent of this incident solar energy could be converted to electricity, supplying the energy used by the United States would require covering roughly two percent of the land in the US with solar cells—that's roughly the area of North Dakota. Since this is about 30 times our available roof space, supplying the grid with electricity from the Sun means building large solar farms.

However, that doesn’t diminish the usefulness of some panels on your roof. If you own your home, you have the potential to make your own electricity. You can reduce or eliminate your dependence on the power company—maybe even sell your surplus power back to it, reducing your costs further, or perhaps even turning a profit.

Given the recent change of federal leadership, it's likely a time of great uncertainty for large US solar initiatives. But individual organizations, businesses, and even citizens can still make decisions for themselves about embracing solar to a greater extent. To get a better idea about the current state of residential-scale solar power in the United States, Ars has been looking at the practicalities, the economics, and the experiences of some people who have recently turned their houses into tiny electrical generating stations. 
Hopefully, even if you live in a basement apartment, you might find the findings... illuminating.

The monthly Coppock Indicators finished January

DJIA: 19864  +92 Up NASDAQ:  5615 +95 Up. SP500: 2279 +95 Up

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