Referendum

Hungary to be stripped of its EU voting rights?

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The EU is voting to strip Hungary of its EU voting rights for consistent failure to heed their values, including migrant quotas. Last year an apathetic turnout to a referendum held on the subject said 98.4% of Hungarians were against forced migrant quotas. Putting to one side the altruism of the EU, trying to force a member state to tow the line is absurd, not so much for the country but the migrants.

Let’s not forget this is the EU making up for Merkel’s single-handed poorly executed thought bubble in the first place. She put forward a come one come all rhetoric on her own.

In a sense the EU can rant on all it likes about humanitarism (although 80% are economic refugees (i.e. not fleeing war zones) according to figures by Eurostat) but forcing asylum seekers into a country that doesn’t want them doesn’t seem optimal. We can snigger at Hungary and call them bigoted, racist or worse but the fact of the  matter is migrants on the whole won’t be welcome.

The EU forcing unwanted guests to a Hungarian dinner table has obvious consequences. The embittered host is likely to ruin the goulash and spoil the palatschinke in an attempt to get the visitors to leave.  Many are unaware the third largest political party in Hungary is Jobbik (won 21% of seats in the 2014 election) which has all the hallmarks of Roehm’s SA, right down to the uniforms. Jobbik has a record of roughing up Jews, Gypsies and Roma so before Brussels tells Budapest it must accept migrant quotas perhaps an assessment of the reality would be wise. Jobbik is left to do its ruffian business and Hungarian authorities turn a blind eye. That is the bigger issue at sort before imposing quotas.

Surely if refugees were asked Hungary is the last place they want to go after leaving their homeland. Refugees aren’t cattle but the EU is treating them so. Aren’t they surprised when the majority seek Germany as the end destination because of the relative generosity? Do the EU authorities think these migrants don’t have excellent internal information networks? Of course they do.

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To rachet this down a notch what are EU values anyway? The Brits are leaving because they don’t agree with EU values. The Greeks are being trodden on for refusing to accept EU austerity values. The Austrians were threatened with sanctions and punishment if they democratically voted in a right wing president. Are these worthy values? The Swiss handed back a 30 year free pass to join the EU presumably because they didn’t believe in EU values. The list goes on.

Sometimes it is had not to think of the EU as the Gallactic Senate from Star Wars trying to get aliens from different galaxies to agree on everything.

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We all know how unwelcome visitors are treated in the Star Wars Bar when different backgrounds and cultures literally don’t see eye to eye. The EU would do well to respect the diversity of its members, which includes diversity of thought and culture. It is not to say the EU doesn’t have a point from time to time they are dreadful executors of it.

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Italy split right down the middle

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It is kind of telling that the furthest province in the north (Bolzano/Bozen) had the highest  YES vote (63.69%) in the country while the Province of Catania (south-east Sicily) had the highest NO vote at 74.56%. Bolzano/Bozen was diligent with a 67.41% turnout vs 57.41% in Catania. It is a rich/poor divide by the looks of things. If you wish to dig into the details look no further than this site for who voted how.

As I reported in my visit to Italy in September on my personal on-the-ground experience of how bad Italy had become.

“Unfortunately at the hotel I’m at (near the track) seems borderline bankrupt. It’s 31 degrees outside but the hotel says it won’t turn on the aircon because it isn’t in their view hot enough. I said so “what your customers feel is irrelevant then?” Now I’m not staying at the Ritz and I didn’t have any high expectation but so tight is this 3-star hotel, that table cloths from the night before are stained with red wine and the condition of the hotel is in a state of disrepair. Renovators delight might be a good way to think of it. They also requested full payment up front so tight is the cash flow. Note the Province of Rimini (where this place is) was 53.29% NO. If we used this as a benchmark weight for economic struggle then how much worse are the provinces to the south

Just like my post from Florence, one of the boutique stores made it very clear business was terrible and the 50% off sales are ongoing way beyond the usual sales period because people are tapped out. With banks carrying 20% non performing loans, businesses struggling and the referendum postponed again even Italy’s anti-EU 5-star Movement now finds itself embroiled in scandal meaning the anti-establishment party doesn’t offer Italians a real alternative to the malaise they’re in.” Same thing for Florence. Florence actually voted YES 57.71% with 78% turnout. Florence is a huge tourist trap yet the sales are probably ongoing.

Italy is the 3rd largest economy in Europe and 30% of corporate debt is held by SMEs who can’t even make enough money to repay the interest. The banks have been slow to write off loans on the basis it will eat up the banks’ dwindling capital. It feels so zombie lending a la Japan in the early 1990s but on an even worse scale.

Monte Dei Paschi De Siena, a bank steeped in 540 years of history has 31% NPLs and its shares are 99.9% below the peak in 2007. Even Portugal and Spain have lower levels of NPLs. The IMF suggested that in southern parts of Italy NPLs for corporates is closer to 50%!

Euro(di)vision contest?

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Does the above surprise you? Europe’s long history almost guarantees it. Don’t get me wrong. I love Europe. Cross a border and the architecture, culture, language and food changes instantaneously. I recall at the time of listing Airbus (EADS) in 1999 and the management wanted to point to their cultural differences by getting three actors to play a German, French and Spaniard with a satirical twist. The German arrived 10 minutes early and was all prepared before the scheduled presentation time of 9am. The French actor rocked up 20 minutes late talking on his mobile phone as he joined the stage to the visible but contained ire of the German actor. 45 minutes later the Spanish actor showed up. The German actor banged the table, stood up and asked him “Where the hell have you been? Didn’t you know the presentation started at 9am?”He replied, “Yes, I know…I just had something better to do!”

However when European member states are told by a bunch of unelected bureaucrats how they must conform against the norms of their individual joie de vivre it can only ever end up as the continent of discontent. I wrote a report on elections 13 months ago pointing to the rapid shift of right-wing parties across Europe (refer to Fig.2 in that report). I’ve since updated the table and it has only gotten more extreme. People are sick and tired of politicians who have lost touch with the average man and woman on the street. Expect Italy’s referendum to be a NO and the right wing FPO’s Norbert Hofer to take the presidency in Austria.

I find Jean-Claude Juncker’s about face perhaps the most telling sign of the EU’s inevitable failure. Pre-Brexit, his aggressive vitriol and arrogance toward member states has slowly dawned on him half a year after the event. He even threw barbs at Farage immediately after his victory speech and told the Brits they’d be punished for their betrayal.

I doubt he had any sleep Saturday night nor Sunday. The Europroject has been a failure. It was always a good theory to unite tribes often at each other’s throats but when a federalist bunch ignored the will of the individuals they sought to rule over then they only have themselves to blame. Such as the plan to fairly distribute refugees among member states. I actually thought the problem was more to do with trying to resettle asylum seekers into countries that didn’t want them. Regardless of the humanitarian angle to helping them, when countries vote 98% to reject them I wouldn’t want to be sent there.

At the end of the day, populism will rule the day in Europe. It has been a long time coming. A Trump win is cited as the reason Europeans are feeling the courage. I doubt it. They’ve been buried under a rock for the last decade as the table above explains clearly.

Why not make it scissors, paper, rock – Sturgeon vs Farage

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How ironic. The people vote to Leave at huge shock to the Remainers and they wish to have another referendum to get the result they want. To be honest 554,000 signatures (which is a million short of the gap to Leave anyway) is pretty lame to be honest.At the absolute height of hysteria over the outcome, why haven’t 15 million signed?

To turn the argument on its head, if Remain won 52-48 we wouldn’t have heard a peep from them. It is a total joke. I always said that the Remain camp’s championing of the National Union of Students (NUS) as a reason to vote remain was a flawed logic. These raving socialists can’t stand democracy. I recall my years as a student at the ANU in Australia with the NUS. It fought feral campaigns to up university fees to line their own pockets. They argued they fought for student rights but alas they were the biggest bunch of underachievers. It was just a way to be a totalitarian.

So to the petition. Yes, if it said  “in any future  referendum it must reach 60% of votes and 75% of voters” then I’d be sympathetic. However the referendum clearly passed the laws of the land. Perhaps they should have a referendum on changing the referendum. Oh and you better do it quick smart before the Scots leave!

Brexit? Brits are the most apathetic voters for EU Parliament

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We’ve heard 1 million stories about Brexit. Remain, Leave etc. However Brits have been one of the most apathetic nations when it comes to voting for EU parliamentarians since 1979. You have to wonder if apathy in the UK will mean the ‘leavers’ are more likely to show up to polling booths to force change. 35% showed  up at the polling booths to vote in 2014.

Interesting to see that Greeks, Italians, Spanish, Austria, Cyprus, Hungary, Ireland show waning effort to vote for EU parliament. Rather telling.

Dire Straits – why you need to worry about the global economy & it is nothing to do with Brexit

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Better to sit down. We will be covering some pretty bleak conclusions in this report. The world’s central banks have hit stall speed. They have lost control and do not have enough altitude to recover. How bad can things get? There are two things at play here. One is economic (explicitly monetary) policy. The other is social reality (explicitly hardship). Both have become dysfunctional. Reckless central bank monetary expansion sold behind the banner of ‘nothing to see here’ has backfired. Money velocity (or the power of money) across the globe is plummeting to record lows. While the GFC was easily avoidable the post disaster mop up operation consists of printing our way out of the disastrous debt pile by inflating it away. Even negative interest rates leave inflation well below targets. Deflation still prevails. Poverty and post-GFC destitution has reached boiling point. When people feel robbed of their identity and increasingly their democracy we should not be surprised to see the rise of nationalism and non mainstream candidates and sadly violence, especially in Europe. This social disruption should not be ignored because the experimental financial engineering that was supposed to wiggle us from the bondage of moral hazard has had the complete opposite effect.

Here are 7 things to ponder;

  • A recent US Federal Reserve survey found that 47% of Americans couldn’t raise $400 in emergency cash were the need to arise. 5% unemployment rate belies financial difficulties.
  • A bank survey in Australia showed 50% of people wouldn’t be able to meet their financial obligations if unemployed for more than 3 months. Housing price to income ratio almost twice the level pre-GFC. Private debt: GDP ratio at 160%.Credit rating downgrade imminent.
  • 60% of ETF purchases in Japan and c. 100% of sovereign bond purchases are bought by the Bank of Japan which now owns 38% of outstanding government debt. 15 year Japanese government bonds now yield -0.004%. Japan’s move to negative rates has caused a run on sales of mini-vaults as people look to store their own cash.
  • M2/M3 money velocity has hit all time lows in the US, ECB, Australia, China & Japan.
  • Italian banks non performing loans (NPLs) are approaching 20% and as high as 50% in the south of the country. The ECB is breaching their own covenants to hide the mess. Belgian Optima Bank has just been shut down for not being able to meet obligations. Many more?
  • Over 25% of those in the EU live below the poverty line and youth unemployment is c.25% with long term unemployment now 50%. In Greece those numbers are 36%, 58% and 72%.
  • China’s industrial sector among others shows clear signs of recording sales without much hope of being paid with receivables ballooning in some cases leaping to over 5 years of reported revenue pointing to a sharp uptick in corporate debt insolvency & NPLs to follow.