http://www.zerohedge.com/news/2013-04-23/saxobank-ceo-we-must-re-evaluate-european-union
SaxoBank CEO: "We Must Re-Evaluate The European Union"
Submitted by Lars Seier Christensen, CEO SaxoBank via his blog,
I have been interested in politics since I was a kid. That is why I remember Denmark’s European Economic Community (EEC) referendum, although I was only nine years old. Election nights were always exciting and I was allowed to stay up a little longer than I otherwise would be allowed to in our home in Loegstrup, outside of the town of Viborg in the western part of Denmark. Here, we had supper at 5pm, I then did my homework and went to bed at a proper time. It was a bourgeois home; my father was, by most accounts, conservative, but voted for The Liberal Party, as did most people in the countryside.
I remember the referendum on October 2, 1972, in a positive light. Denmark stepped onto the main stage and the support of the people was absolutely clear. Voter turnout was over 90 percent and almost two out of three Danes voted for Denmark’s entry into the EEC.
Confidence in European project slowly destroyed
The EEC was perceived as something positive in our home, as it was in most of bourgeois Denmark. I stayed unconditionally positive for many years to come. Even in the Young Conservatives, we were supporters of a European union and some of us even wore blue and yellow EU socks as a symbol of this attractive, long-term plan. But despite this very positive starting point for our view of the EU, I must confess that, over time, this support and optimism evaporated. Massive central bureaucracy, European arrogance and lack of respect for the independence, history and culture of the national states slowly destroyed confidence in the project.
The EEC was perceived as something positive in our home, as it was in most of bourgeois Denmark. I stayed unconditionally positive for many years to come. Even in the Young Conservatives, we were supporters of a European union and some of us even wore blue and yellow EU socks as a symbol of this attractive, long-term plan. But despite this very positive starting point for our view of the EU, I must confess that, over time, this support and optimism evaporated. Massive central bureaucracy, European arrogance and lack of respect for the independence, history and culture of the national states slowly destroyed confidence in the project.
When I look back, I must admit that it took me too long to recognise what the European project really was. But I also have to state that this recognition came much later to many others and some of our career politicians obviously still do not get it. But the Danes, the citizens, the people have smelled the rat. From this point on, it will just be more and more uphill for the EU supporters when new measures need to be adopted, although there is no reason to believe that they will not be trying over and over again.
Why did it go so wrong for the EU?
Václav Klaus, the former Czech President, has tried to answer this question in his book Europe - The Shattering of Illusions. President Klaus - at the end of his presidential period - writes about the European co-operation's development and possible collapse. He analyses the different phases of Europe's economic and political integration from the European Economic Area (EEA) to the European Community (EC) and to the European Union (EU) - and tells it straight in a blunt criticism of our era of uncritical "eurocracy". In the Danish version of the book, Europa - Integration uden illusioner, I wrote a postscript, of which this post is an extract.
Václav Klaus, the former Czech President, has tried to answer this question in his book Europe - The Shattering of Illusions. President Klaus - at the end of his presidential period - writes about the European co-operation's development and possible collapse. He analyses the different phases of Europe's economic and political integration from the European Economic Area (EEA) to the European Community (EC) and to the European Union (EU) - and tells it straight in a blunt criticism of our era of uncritical "eurocracy". In the Danish version of the book, Europa - Integration uden illusioner, I wrote a postscript, of which this post is an extract.
EU the problem rather than the solution
The big question raised in the book is really whether the EU is more the problem than the solution in the current crisis.
The big question raised in the book is really whether the EU is more the problem than the solution in the current crisis.
Both the EU and Denmark are in a difficult situation. The euro has shown its true colours and anyone with a rational view of the world sees the currency collaboration as a historic failure that can lead to even further fatal consequences for Europe and the continent’s competitiveness vis-à-vis the rest of the world. There is one thing, and only one thing, that can rescue the euro. That is a much more far-reaching integration between the euro countries; a common financial policy, joint debt issuing, a willingness to pay enormous transfers from the rich to the poor countries or, more specifically, from Germany to all the other member states.
That is a possible route, but not a desirable one. At least not for the citizens who in this case - like in too many other cases - seem to have fundamentally different interests than politicians. It requires a will to give up national independence to an extent that is not acceptable to the voters and, precisely because of this, can only be accomplished in an undemocratic manner.
A speech by British Prime Minister David Cameron on January 23 was extraordinarily important. It represented a strengthening of the critical debate that many Europeans are striving for. Until this moment, Václav Klaus was the only head of state who contributed to that debate. The fact that the prime minister of one of the EU’s most important countries is stepping forward as the focal point for citizens who want a different EU can turn out to be extremely important, although the initial reactions from the EU elite were as negative as they were predictable. The EU does not take criticism and debate lightly.
Lesson to be learned from Cameron
But with the UK’s forthcoming attempt to negotiate a less restrictive agreement with the EU, Pandora’s box has now been opened. Cameron’s rational reasoning will contribute to exposing the EU’s rigid insistence on more power despite the poor results. It will become increasingly difficult for both the Brits and other EU citizens to understand a firm rejection of Cameron’s five principles – competitiveness, flexibility, more power to the national states, democratic responsibility and fairness. That the EU will have to argue against such reasonable demands and as strongly as possible try to prevent referendums about them would only create more attention and more criticism not least because the Eurozone will come under further economic pressure as a possible referendum would be approaching in the UK in 2017.
But with the UK’s forthcoming attempt to negotiate a less restrictive agreement with the EU, Pandora’s box has now been opened. Cameron’s rational reasoning will contribute to exposing the EU’s rigid insistence on more power despite the poor results. It will become increasingly difficult for both the Brits and other EU citizens to understand a firm rejection of Cameron’s five principles – competitiveness, flexibility, more power to the national states, democratic responsibility and fairness. That the EU will have to argue against such reasonable demands and as strongly as possible try to prevent referendums about them would only create more attention and more criticism not least because the Eurozone will come under further economic pressure as a possible referendum would be approaching in the UK in 2017.
It is a unique chance for the countries outside the Eurozone to create an independent forum chaired by Cameron. The Danish Prime Minister ought to have been on the first flight to London to discuss this. It did not happen, of course, but the hope for a better EU has been strengthened by Cameron’s newfound leadership.
It is hard to understand why the EU does not recognise that it has been wrong in many ways and that many European citizens suffer because of that. Instead of senselessly pushing the failed project, then using the crisis to re-evaluate the project, check the course and listen to the European populations. They want to move in a different direction, both Danes and the people of the other EU countries. It is time for the politicians to understand that they are here for the sake of their citizens and not the other way around.
Although I hope I never will experience it I still dare to predict how a strong Europe will be developing if the European Commission and the European Parliament and the Barosso’s and Van Rompuy’s of this world will gain the kind of power they dream of and are well on their way to gaining.
Higher taxes and great poverty
There will be more uniform and considerably higher tax levels than today. There will be direct EU taxes going straight to the EU Commission and the EU budget. There will be massive exit taxes, fines and other barriers for those who might want to move out of the EU. Even if you do move outside the EU, the EU will demand global taxing rights.
There will be more uniform and considerably higher tax levels than today. There will be direct EU taxes going straight to the EU Commission and the EU budget. There will be massive exit taxes, fines and other barriers for those who might want to move out of the EU. Even if you do move outside the EU, the EU will demand global taxing rights.
There will be great poverty in a string of ”regions” formerly known Spain, Italy, Greece and others. There will be huge and growing powers concentrated in the hands of the Germans (and the French in recognition of their support). There will be no veto rights for national states and smaller states will have very little influence.
EU stagnation and exodus from EU
There will be economic stagnation all over the EU. The financial sector will have moved to the U.S.A, China, Hong Kong and Singapore. Industry will have moved to Asia, The young, the talented and well educated will to an increasing extent move away. But the EU will be a leader in symbolic and irrational activities like low CO2 discharges, green companies and other costly and economically losing propositions.
There will be economic stagnation all over the EU. The financial sector will have moved to the U.S.A, China, Hong Kong and Singapore. Industry will have moved to Asia, The young, the talented and well educated will to an increasing extent move away. But the EU will be a leader in symbolic and irrational activities like low CO2 discharges, green companies and other costly and economically losing propositions.
There will be growing suppression of freedom of speech as far as critical expressions are concerned with regard to other cultures, religions and the EU itself, and increased attention towards suppressing deviating and asocial attitudes like scepticism towards climate projects, social “rights” etc. Political correctness will have achieved unknown heights.
On the international stage, the EU will be a weak player with low credibility and respect and will increasingly have to do exactly what the big creditor nations demand because the union will be strongly dependent on them. In the United Nations, the EU will seek collaboration with third world countries in an attempt to transfer its own system to a global institution.
Can we allow this to happen?
Actually I think that Europeans have made this decision and that they have made the right decision. In any case, I trust that they will do that when it becomes crystal clear which roads they have to choose between. But I am not so sure that European politicians will do the same. And I am not confident that they would care to ask Europeans if they could avoid it in any way. So the time has come to make it impossible for politicians not to ask Europeans.
Actually I think that Europeans have made this decision and that they have made the right decision. In any case, I trust that they will do that when it becomes crystal clear which roads they have to choose between. But I am not so sure that European politicians will do the same. And I am not confident that they would care to ask Europeans if they could avoid it in any way. So the time has come to make it impossible for politicians not to ask Europeans.
The time has come to do everything to ensure that Europeans understand what the future perspectives of this choice are and that Europeans understand the importance of this choice; that Europeans understand the risk that perhaps they will never again get the chance to make this decision on their own.
I think we can and will succeed in warning Europeans. I think we can and will succeed in finding the right way forward for Europe.
Spain throwing in the sovereignty spidey towel ?
http://www.zerohedge.com/news/2013-04-23/spains-rajoy-yields-merkel-agrees-eu-countries-must-cede-sovereignty
Spain's Rajoy Yields To Merkel, Agrees That EU Countries Must Cede Sovereignty
In what seems like a bow to his overlords in Berlin, Spanish Prime Minister Mariano Rajoy has unleashed a somewhat remarkable torrent of terrible realization and truthiness:
- *SPAIN PM SAYS EUROPE ECONOMY WORST THAN FORECAST THIS YEAR
- *SPAIN PM SAYS ALL EU COUNTRIES ARE REVIEWING GROWTH FORECASTS
- *SPAIN PM SAYS MUST TAKE DIFFICULT DECISIONS FOR COUNTRY'S GOOD
- *SPAIN PM SAYS EU COUNTRIES MUST ACCEPT TO GIVE UP SOVEREIGNTY
- *EU countries’ giving up sovereignty to the bloc is crucial for its future
In other words, handing over your liberty to Germany is for your own good. It seems the German perspective (as we noted here) is winning out.
and today's news and views.....
http://www.zerohedge.com/news/2013-04-24/italys-president-names-pds-enrico-letta-prime-minister-vote-parliament-come
Italy's President Names PD's Enrico Letta Prime Minister, Vote In Parliament To Come
When it comes to Italy, the market may have priced in every possible favorable outcome (the ECB and Kuroda will take care of the rest), but the country still has no Prime Minister and its economy continues to be in freefall with record unemployment and ever higher bank non-performing loans month after month. And while it may have elected a new figurehead president after 6 attempts last week, the choice of Prime Minister will hardly be as simple, especially since as we learned moments ago, the mandate to form a government was just given by president Napolitano to Enrico Letta, deputy of the Democratic Party (which as a reminder is in complete chaos following last week's internal coup and the resignation of its head Bersani over the weekend), at a time when Berlusconi's PDL lead in the polls continues to increase. Why the Bunga veteran would agree to a premiership by his opponents remains unclear, and with a parliamentary vote coming, it is doubtful just how smooth the approval process will be in a country best known for its dysfunctioning political process.
From the WSJ:
Italy's President Giorgio Napolitano summoned Enrico Letta, deputy of the center-left Democratic Party, to a meeting at the president's palace—the first step to naming Mr. Letta prime minister of a new Italian government.Mr. Napolitano, who was re-elected on Saturday, said this week that he would move quickly to name someone who could run a bipartisan government in the hope of ending a two-month political impasse and setting the country on course for reforms, including changing a dysfunctional electoral law. Mr. Letta is due to see Mr. Napolitano at 12:30 local time.If, as expected, Mr. Letta is asked to form a new government, he would then proceed to naming his cabinet ministers, and the new administration would have to then win confidence votes in parliament before starting its tenure. If his government were confirmed by parliament, Mr. Letta—who is 46 years old—would become one of the youngest leaders in Europe.
What makes things especially complicated, is that according to the latest Ipsos poll, it is the PDL that should get the PM mandate according to popularity, something Berlusconi is keenly aware of:
- Centre-right 34.7% (PDL 28.2%),
- Centre-left 29% (PD 24.7%),
- M5S 24.1%,
- Monti/centre 8.9%
Adding insult to injury, Letta is an "anti-austerian", saying austerity measures are no longer sufficient to help with the crisis, which means if he is elected, he and Merkel (and of course Schaeuble) will clash head on, as he picks up the baton where Berlusconi left off in November 2011 - hardly a prescription for a happy ending.
So watch this space: if the vote for Letta is not as smooth as the market anticipates (and this one can't be blamed on the winter weather), expect a prompt return to completely chaotic baseline, which if Belgium is any indication, may just be the best possible outcome for Italy.
Finally, we are confident some may be interested to note that since 2004, Letta has been a Vice-Chairman of the Aspen Institute Italy. The Aspen Institute, of course, is affiliated with the CFT, and the Bilderberg Group.
In other words, instead of a Goldman technocrat, Italy is about to be headed by a globalist technocrat. Out of the frying pan...
http://www.zerohedge.com/news/2013-04-24/overnight-summary-which-we-read-german-zew-miss-blamed-winter-weather
Overnight Summary, In Which We Read That The German ZEW Miss Is Blamed On "Winter Weather"
- Apple
- Bond
- Budget Deficit
- CDS
- Central Banks
- China
- Credit Suisse
- European Central Bank
- fixed
- Germany
- Global Economy
- Gross Domestic Product
- headlines
- Italy
- Japan
- Jim Reid
- Markit
- New Home Sales
- Nikkei
- Price Action
- recovery
- Reuters
- Richmond Fed
- SocGen
- Sovereign CDS
- Swiss Franc
- Switzerland
- White House
It is one thing for the market to no longer pay attention to economic fundamentals or newsflow (with the exception of newsflow generated by fake tweets of course), but when the mainstream media turns full retard and comes up with headlines such as this: "German Ifo Confidence Declines After Winter Chilled Recovery" to spin the key overnight event, the German IFO Business climate (which dropped from 106.2 to 104.4, missing expectations of 106.2 of course) one just has to laugh. In the artcile we read that "German business confidence fell for a second month in Aprilafter winter
weather hindered the recovery in Europe’s largest economy... “We still expect there to have been a good rebound in the first quarter, although there is a big question mark about the weather,” said Anatoli Annenkov, senior economist at Societe Generale SA in London." We wonder how long Bloomberg looked for some junior idiot who agreed to be memorialized for posterity with the preceding moronic soundbite because this really is beyond ridiculous (and no, it's not snow in the winter that is causing yet another "swoon" in indicators like the IFO, the ZEW and all other metrics as we patiently explained yesterday so even a 5 year old caveman financial reported would get it).
weather hindered the recovery in Europe’s largest economy... “We still expect there to have been a good rebound in the first quarter, although there is a big question mark about the weather,” said Anatoli Annenkov, senior economist at Societe Generale SA in London." We wonder how long Bloomberg looked for some junior idiot who agreed to be memorialized for posterity with the preceding moronic soundbite because this really is beyond ridiculous (and no, it's not snow in the winter that is causing yet another "swoon" in indicators like the IFO, the ZEW and all other metrics as we patiently explained yesterday so even a 5 year old caveman financial reported would get it).
And if that wasn't reason enough to breakdown in riotous laughter, one look at the reaction in the EUR, which tumbled 40 pips on the news, only to soar 100 immediately thereafter as the BIS came to the rescue and started lifting every offer to give the impression that all is well, and in the process push the USDJPY and the eMini stock future with it, should be enough.
There were no other major economic news (that could be blamed on the weather), and the next key reporting milestone is the US durables report. Just what idiotic reason will the miss here be blamed on by the MSM we wonder.
In the European fixed income space, the onslaught of Japanese cash continues, with Spanish 5 Year yields sliding under 3% on the back of even more calls for ECB rate cuts, while at the same time Germany auctioned 30 Year bonds at a record low yield of 2.16%. The scramble for yield has never been more acute.
Finally, moments ago we learned that Italy's brand new (and we use the term loosely), second term president, 87 year old Napolitano will name PD depity Enrico Letta as PM of Italy. How Berlusconi will feel supporting an opponent when the latest polls have his coalition far in first place, remains to be seen. For now the market doesn't care and only hope there is no more snow in the winter which apparently explains all that is wrong with the world.
For everything else, there's CentralBankCard.
Some more insights from SocGen:
The pace of decline in peripheral bond yields and the resulting narrowing in spreads over bunds is taking on frightening proportions, and for a change, does not strictly appear to be only sponsored out of Japan (waiting on monthly balance of payments data to confirm that is the case). On a day when the global economy flashed new signs of slowing demand, yesterday's performance across asset classes was very impressive to say the least (iTraxx tighter by nearly 4pts, Eurostoxx +2.5%). The bullish price action has not been reflected in the currency markets (with the exception of the besieged Swiss franc), with the SEK in particular taking a serious knock. With peripheral yields crumbling, gone are the safe haven attractions of AAA currencies like the SEK (or the franc).
But are the moves for real? Harking back to miserable macro fundamentals, it won't be a 2-year extension for Spain to meet its deficit limit that will bring back growth imminently, or a contraction in German GDP that will bring back inflation in Switzerland. Either there is a big reallocation trade going on in Japan (EUR/JPY upside potential) or markets are pinning their hopes on central banks like the ECB (the SNB) to deliver something extra in terms of stimulus (currency intervention). But as our economists point out, this is not seen resolving the underlying issues of credit demand and supply which have dogged the eurozone's recovery. The German IFO survey this morning could be a timely reminder that while there is positive contagion in bonds, the negative ripple effect from southern to northern Europe has not stopped spreading. With the above in mind, predicting the next 1.5% move in EUR/USD is incredibly difficult.
The full recap from DB's Jim Reid:
It was one of those ‘bad news is good news’ days for markets. The disappointing German (and Chinese) PMIs were quickly looked through by investors as expectations of ECB easing rose on the back of softer data. A broad based rally in markets carried the CAC, DAX, IBEX and FTSEMIB +3.58%, +2.41%, +3.26% and +2.93% higher on the day, respectively. Italian and Spanish 10-year bond yields fell by 11bp and 21bp to close at 3.94% and 4.28%, respectively – which also brings them to their lowest levels since November 2010. European credit spreads echoed the move elsewhere although they were a relative underperformer to equities with Crossover only13bp tighter on the day. It was a showdown between fundamentals and hopes of (more) central bank liquidity with latter seemingly gaining an upper hand yesterday.
The European session cleared the way for a positive start in the US which lasted throughout the day, only to be briefly interrupted by a fake Associated Press tweet that two explosions had hit the White House. AP later clarified that its twitter account has been hacked and the tweet was bogus. Nonetheless it caused a short-lived panic which saw the S&P 500 plunge 1% in the afternoon before recovering in the next few minutes to eventually close 1% higher on the day. US sentiment was supported by the better-than-expected new home sales print (1.5% vs 1.1% expected) even though the Markit US PMI Preliminary (52.0 vs 53.9 expected) and Richmond Fed survey (-6 vs +2 expected) for April were both below market estimates. It was also a mixed day for earnings as strong EPS beats was again met by disappointing top line performances. Of the 36 companies that reported yesterday, 26 of those topped EPS consensus but only 10 of those came ahead of sales estimates.
Apple’s quarterly earnings report was the main story after the closing bell. The company delivered better-than-expected earnings and revenue but sales outlook was light. Capital management was a key focus with Apple more than doubling its capital return program from $45bn to $100bn by 2015. For us credit people, it was interesting to see Apple announce plans to put some debt on its balance sheet for the first time since 2003. Apple received its debut credit rating of AA+ (S&P) and Aa1 (Moody’s) yesterday so maybe credit investors are not too far away from taking a bite at Apple after all! Apple stocks closed -0.54% lower in extended hours trading to close at $403.95/share.
Turning to the Asian session, equities are mostly stronger following the positive US lead overnight. The Nikkei (+1.6%) is leading the way again while the Hang Seng and KOSPI are also +1.3% and +0.9% higher as we type. WTI is up +0.3% at $89.5/bbl while Gold is up +0.7% at $1423/oz. Asian iTraxx is about 1bp tighter and the new issue pipeline remains very robust. Australia’s sovereign CDS is 1bp tighter despite S&P’s warning that the country’s AAA credit rating will come under pressure if the government does not show commitment to eliminate the budget deficit. The Shanghai Composite (+0.68%) is up for the first time this week after a 2.6% decline yesterday.
Staying in the region, the WSJ reported China sent eight maritime-patrol ships to the waters surrounding the Senkaku/Diaoyu islands. China said it was responding to the "illegal entry" of boats piloted by Japanese activists into its waters. The Chinese fleet was the largest sent to the area since the island dispute flared up in September last year. Senior government officials from each side demanded that the other withdraw ships from its territorial waters around the islands. This renewed tension came a day after visits to the Tokyo war shrine by top aides of PM Abe which reportedly had set off angry protests from Seoul and Beijing.
Back to Europe, Italy’s President Napolitano is set to announce his choice of PM to form a new government today. Reuters reported that the new coalition government could take office in a matter of days and would be backed primarily by the rivals on the centre-left and centre-right. These are the same parties that had refused to reach a deal since national elections in late February. Former PM Amato is said to be a leading candidate to receive the pole position although the mayor of Florence, Matteo Renzi and centre-left deputy leader Enrico Letta have also emerged as possible candidates. Berlusconi's PDL, the centre-left PD and the centrist Civic Choice movement have all said they would cooperate with whoever Napolitano chooses.
So while we keep a close eye on Italian politics today, ECB’s lending survey and Germany’s IFO survey are also key releases in Europe. As we go to print, Credit Suisse just reported better-than-expected earnings headline. In the US, durable goods orders will be the notable print. We also have a busy day of company earnings with more than 40 S&P 500 firms expected to report.
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