Saturday, 25 March 2017

Weekend Update 25/03/2017 The Dying EUSSR Turns 60.

"Lasciate ogne speranza, voi ch'intrate"

The EUSSR slogan.

The big day is finally here. Sixty years ago today, France, Germany and Italy, plus the Benelux minnows, signed the Treaty of Rome creating the European Economic Community, which eventually morphed into today’s sclerotic, bureaucratic, wealth and jobs destroying, German run, dying EUSSR. Will it linger on to see three score years plus ten? Without serious reform, my guess is that it won’t, but there’s no sign of the rump-EU ex-Britain attempting serious reform.  There’s no sign of Europe attempting to reform its dangerous bankster sector, led by derivatives gambling mad Deutsche Bank, whose destruction will set off a chain of events far worse that when Lehman Brothers collapsed.  The snake bit EUSSR staggers on from unresolved crisis to crisis.

Below, Pope Francis thinks the EUSSR needs a miracle.

Fri Mar 24, 2017 | 1:56pm EDT

EU risks dying, needs new vigor and passion, says Pope Francis

Pope Francis told Europe's leaders on Friday the continent faced a "vacuum of values" as they marked the EU's 60th birthday, condemning anti-immigrant populism and extremism that he said posed a mortal threat to the bloc.

Prime ministers and presidents from 27 EU member states have descended on Italy to mark the 1957 founding Treaty of Rome, receiving a papal blessing on the eve of the anniversary.

However, celebrations have been tempered by a string of crises, including prolonged economic turmoil, an influx of migrants and Britain's decision to leave the bloc, that have raised fears for the future of the union.

"When a body loses its sense of direction and is no longer able to look ahead, it experiences a regression and, in the long run, risks dying," Francis told the leaders gathered in an ornate, frescoed chamber in the heart of the Vatican.

Just six nations signed the original treaty in 1957 and on many levels the EU can be viewed as a success, swelling to embrace 28 countries gathered in the world's largest trading bloc and blessed with rising life expectancy and solid prosperity.

But with anti-European parties gaining support, the pope warned of a growing split between EU citizens and their institutions and said greater solidarity was the "most effective antidote to modern forms of populism".

The Argentinian-born pontiff told the leaders they needed to promote Europe's "patrimony of ideals and spiritual values" with greater passion and vigor.

"For it is the best antidote against the vacuum of values of our time, which provides a fertile terrain for every form of extremism," he said, mentioning the attack in London this week by a British-born convert to Islam, who killed four people.

The pope has repeatedly criticized Europe over the past five years for its perceived lack of vision, drawing the ire of German Chancellor Angela Merkel in 2014 when he described the EU as an elderly woman who was "no longer fertile and vibrant".

He adopted a less hostile tone on Friday, but urged the continent not to close in on itself and resurrect walls -- a message aimed as much at U.S. President Donald Trump as at EU leaders struggling to deal with mass immigration.

----Thousands of demonstrators are expected to take to the streets of Rome on Saturday in at least six different rallies called by numerous groups across the political spectrum to protest against various aspects of EU rule.

Some 5,000 police have been called up to patrol the streets and the interior ministry has warned it will crack down swiftly on any violence.

Anti-migrant posters have been plastered on boards across the city, calling people to join one of the many marches to put pressure on the EU to turn back the newcomers.

The EU Has a Lot to Celebrate (and Work to Do)

March 24, 2017 1:00 AM EST
The thing about birthdays is that you can't choose when they fall. Europe's leaders might have that in mind as they arrive in Italy this weekend to celebrate the 60th anniversary of the Treaty of Rome, the founding act of the European Union. The timing of this party is less than ideal.

Next week the U.K. will formally announce its departure from the union -- the first such exit in the EU's history. Even putting Brexit aside, Europe has never faced so many different problems all at once: a slow and unbalanced economic recovery; surging populism in France and elsewhere; a revanchist Russia and an erratic, isolationist White House exposing the frailty of Europe's defenses; hundreds of thousands of migrants arriving from the Middle East and Africa, testing the political limits of the free movement of people, one of the principles enshrined in the 1957 treaty.

And the EU's response to all this? So far, unimpressive.

Don't expect that to change this weekend. As well as celebrating the anniversary, Europe's leaders have approaching elections to contend with. France and Germany go to the polls within the next 12 months, and so might Italy. Voters have shown little appetite for the kinds of reforms that the EU needs to be contemplating. However, once those elections are over, Europe had better turn urgently to the repairs the EU needs. And the planning for those reforms can't start too soon.

Strengthening the monetary union ought to be a priority. Next year, the European Central Bank will need to scale back its program of quantitative easing. This policy has helped to assure investors that euro-zone government bonds are relatively safe. As the central bank steps back, fears that the euro system might break up could come to the fore again, calling the safety of some public debts into question and jeopardizing the whole enterprise.

In other news, an increasingly exasperated China, seems to be on a campaign of push back. But are any in Japan and America listening, or even willing to listen? Has a clash between China and America become inevitable? If it has, will either’s economy survive a trade war, let alone a real war.

Fri Mar 24, 2017 | 11:54pm EDT

Globalization is a reality, not matter of choice: China's bank governor

Globalization is a reality for all countries, and is not a matter of choice, the People's Bank of China's governor, Zhou Xiaochuan, on Saturday.

Zhou hopes to see clearer language on free trade and globalization at a G20 summit in July, the Chinese central bank governor said at the Boao Forum for Asia.

This month, G20 finance ministers and central bankers dropped a pledge to keep global trade free and open in their communique issued after a gathering in Germany, acquiescing to an increasingly protectionist United States.

China’s economy is on the verge of a painful credit crunch

Published: Mar 23, 2017 8:17 a.m. ET
One of China’s most widely used interbank borrowing rates surged to its highest level since late 2014 earlier this week, stoking worries that a painful credit crunch could be looming as the country’s central bank moves to tighten monetary conditions, according to a research note from Goldman Sachs.

China’s seven-day repurchase (repo) rate shot to 5.5% on Tuesday from 3.85% on Monday, before settling at 5% on Wednesday.

For anyone who follows Chinese politics, the sudden jump in interest rates is hardly surprising: At an annual meeting of China’s parliament that concluded a week ago, the country’s leaders said that tackling risks related to the country’s growing pile of risky debt would become a priority.

The Goldman team, led by MK Tang, the investment bank’s senior China economist, said it expects interbank rates to remain fairly volatile in the coming days as the People’s Bank of China (PBOC) prepares for its quarterly macroprudential assessment, which will take place at the end of March.

Persistently higher rates could create problems for Chinese companies and financial institutions that are heavily reliant on short-term credit to finance their operations, as the chart below illustrates.

---- Economists have widely cited China’s growing pile of bad debt as a potential risk to the global financial system. China has overtaken the eurozone to become the world’s largest banking system by the aggregate value of loans outstanding, as the Financial Times reported earlier this month. China’s economy has relied heavily on debt to drive growth since the global financial crisis.

Last week, the PBOC decided to raise short-term policy rates for the third time in three months, mirroring a similar move undertaken by the Federal Reserve just a day earlier.

---- Lenders in need of short-term liquidity often turn to the repo market, where they can find funding by pledging debt securities as collateral.

China’s seven-day repo rate is based on transactions in the country’s interbank repo market that occur between 9 a.m. and 11:30 a.m. local time. It is important to note that nonbank financial institutions, which account for an increasing share of loans originated in the world’s second-largest economy, also participate in this market.

Most interest-rate swaps that originate in the country reference the 7-day repo rate as a baseline.

Thu Mar 16, 2017 | 6:14am EDT

China pledges firm response if Japan interferes in South China Sea

China on Thursday pledged a firm response if Japan stirs up trouble in the South China Sea, after Reuters reported on a Japanese plan to send its largest warship to the disputed waters.

The Izumo helicopter carrier, commissioned only two years ago, will make stops in Singapore, Indonesia, the Philippines and Sri Lanka before joining the Malabar joint naval exercise with Indian and U.S. naval vessels in the Indian Ocean in July, sources told Reuters.

The trip would be Japan's biggest show of naval force in the region since World War Two.

"If Japan persists in taking wrong actions, and even considers military interventions that threaten China's sovereignty and security... then China will inevitably take firm responsive measures," Foreign Ministry spokeswoman Hua Chunying said at a regular press briefing.

China said on Tuesday that it was waiting for an official word on why Japan plans to send the warship on the tour through the South China Sea, but that it hoped Japan would be responsible.

Hua did not say on Thursday if China had received confirmation of the plan, but said that the South China Sea issue did not involved Japan and that the country should "reflect deeply" on its "disgraceful" past invasion of the Paracel and Spratly Islands.

Japan controlled the islands during World War Two until its surrender in 1945.

Finally, for those with the time this weekend, a good read. In America this century, it’s increasingly hard to tell the crooks from the police and prosecutors.

‘Bro, I’m Going Rogue’: The Wall Street Informant Who Double-Crossed the FBI

Guy Gentile flipped, and flipped again.
by Zeke Faux m23 March 2017, 09:00 GMT

On the night he cut a deal with the FBI, Guy Gentile was on his way to a Connecticut casino for his cousin’s bachelor party. He’d jetted up from the Bahamas, where he was running an online stock brokerage that cleared a million dollars a year without much effort on his part. Then 36, he was a working-class kid who’d finagled his way into the dicier edges of finance, and he dressed the part, with neatly trimmed stubble, designer jeans, a silver Rolex, and sunglasses that hung from the collar of his tight T-shirt, just below a few tufts of chest hair.

Gentile was feeling edgy about traveling stateside. It was July 2012, and regulators had been making calls about a stock play he’d been involved with a few years earlier. He’d been part of a group that the FBI suspected had suckered investors out of more than $15 million by manipulating the market for shares in a Mexican gold mine and a natural gas project in Kentucky.

As Gentile’s plane landed in White Plains, N.Y., he saw the flashing lights of police cars on the tarmac, confirming his fears. Before passengers could disembark, uniformed men came on board. Gentile dialed his lawyer, but the men grabbed the phone out of his hands, handcuffed him, and marched him off the plane.

Soon, two FBI agents picked him up from an airport detention room and drove him to a neon-lit diner in Newark, N.J., near their office. They bought Gentile a bacon cheeseburger and a Diet Coke and told him he had two options: Either they could throw him in jail, seize his assets, and hand his case to a prosecutor with a 95 percent win rate, or he could help them catch a bigger fish—and maybe make his problems go away. Gentile didn’t need to think it over. Whatever you want, he said, I’ll do it.

More, much, much more.

We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness outside of the EUSSR.”

With grateful thanks to the writers of the US Declaration of Independence.

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