#italy

This can only end in tears

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As Sweden’s economy slows to the worst economic growth rate in 5 years under a negative interest rate policy, one would think the Swedish Central Bank (Riksbank) would be seeking to prudently manage its asset book on the basis of appropriate risk/reward as opposed to lecturing Australia and Canada on their respective carbon footprints. What we are witnessing is yet another discrete move by authorities to manipulate markets based on fantasy rather than fact.  The hypocrisy is extreme as we shall discover.

While the Riksbank should have complete freedom in how it wishes to deploy capital, we should view this is a pathetic sop to the cabal at the European Central Bank (ECB). Since when did central bankers become experts on climate change? The RBA is no better. Deputy Governor, Guy Debelle, gave a speech in March 2019 on the risks posed by climate change which based prophecies on the data accident-prone IPCC and Bureau of Meteorology. Why not seek balance? Easier to fold to group think so as not to be outed as a pariah. Utterly gutless. Our own APRA is also pushing this ridiculous agenda on climate change reporting. It is willful negligence.

While it is true that on a per capita basis, Australia and Canada’s emissions are higher than the global average, why doesn’t the Riksbank give us credit for lowering that amount 11.4% since 2000? Even Canada has reduced its carbon emissions by 7.3% over the last 18 years. Admittedly Sweden’s emissions per capita have fallen 21.9% according to the IEA. Greta will be happy.

Why hasn’t the Riksbank taken China or India to task for their 169.9% or 94.7% growth in CO2 emissions respectively? There are plenty of oil-producing nations – Qatar, UAE, Bahrain, Saudi Arabia and Oman that have worse per capita outcomes than Australia or Canada. Do these countries get special dispensation from the wrath of the Riksbank? Clearly.

The US has pulled out of the Paris Climate Accord. If the US has marginally lower emissions per capita (15.74t/CO2-e) than Australia (16.45t/CO2-e), isn’t a double standard to write,

The conditions for active climate consideration are slightly better in our work with the foreign exchange reserves. To ensure that the foreign exchange reserves fulfil their purpose, they need to consist of assets that can be rapidly converted to money even when the markets are not functioning properly. Our assessment is that the foreign exchange reserves best correspond to this need if they consist of 75 per cent US government bonds, 20 per cent German and 5 per cent British, Danish and Norwegian government bonds.

Essentially Riksbank commitment to climate change is conditional. The US which is responsible for 13.8% of global emissions can be 75% of holdings. Australia at 1.3% can’t. No doubt sacrificing Queensland Treasury Corp, WA Treasury Corp and Albertan bonds from a Riksbank balance sheet perspective will have little impact on the total. In short, it looks to be pure tokenism. The Riksbank has invested around 8% of its foreign exchange reserves in Australian and Canadian central and federal government bonds. So perhaps at the moment, it is nothing but substitution from state to federal. Why not punish NSW TCorp for being part of a state that has 85%+ coal-fired power generation?

At the very least the Riksbank admits its own hypocrisy.

The Riksbank needs to develop its work on how to take climate change into consideration in asset management. For instance, we need a broader and deeper analysis of the issuers’ climate footprint. At the same time, one must remember that the foreign exchange reserves are unavoidably dominated by US and German government bonds. The Riksbank’s contribution to a better development of the climate will, therefore, remain small. This is entirely natural. The important decisions on how climate change should be counteracted in Sweden are political and should be taken by the government and the Riksdag (parliament).

Still, what hope have we got when Benoît Cœuré, member of the Executive Board of the ECB, lecturing those on “Scaling up Green Finance: The Role of Central Banks.” He noted,

2018 has seen one of the hottest summers in Europe since weather records began. Increasing weather extremes, rising sea levels and the Arctic melting are now clearly visible consequences of human-induced warming. Climate change is not a theory. It is a fact.

Reading more of this report only confirms the commitment of the ECB to follow the UN’s lead and deliberately look to misallocate capital based on unfounded claims of falling crop yields and rising prices (the opposite is occurring) and rising hurricane and drought activity (claims that even the IPCC has admitted there is little or no evidence by climate change). Sweden is merely being a well-behaved schoolboy.

Cœuré made the explicit claim, “The ECB, together with other national central banks of the Eurosystem, is actively supporting the European Commission’s sustainable finance agenda.

CM thinks the biggest problem with this “agenda” is that it risks even further misallocation of capital within global markets already drowning in poorly directed investment. It isn’t hard to see what is going on here. It is nothing short of deliberate market manipulation by trying to increase the cost of funding to conventional energy using farcical concocted “climate risks” to regulate them out of existence.

Cœuré made this clear in his speech,

once markets and credit risk agencies price climate risks properly, the amount of collateralised borrowing counterparties can obtain from the ECB will be adjusted accordingly.

What do you know? On cue, Seeking Alpha notes,

Cutting €2bn of yearly investments, the European Union will stop funding oil, natural gas and coal projects at the end of 2021 as it aims to become the first climate-neutral continent.

All CM will say is best of luck with this decision. Just watch how this kneeling at the altar of the pagan god of climate change will completely ruin the EU economy. The long term ramifications are already being felt. The EU can’t escape the fact that 118mn of its citizens (up from 78m in 2007) are below the poverty line. That is 22% of the population. So why then does Cœuré mention, in spite of such alarming poverty, that taking actions (that will likely increase unemployment) will be helped by “migration [which] has contributed to dampening wage growth…in recent years, thereby further complicating our efforts to bring inflation back to levels closer to 2%.

Closer to home, the National Australia Bank (NAB) has joined in the groupthink by looking to phase out lending to thermal coal companies by 2035. The $760 million exposure will be cut in half by 2028. If climate change is such a huge issue why not look to end it ASAP? This is terrible governance.

Why not assess thermal coal companies on the merits of the industry’s future rather than have the acting-CEO Philip Chronican make a limp-wristed excuse that it is merely getting in line with the government commitment to Paris? If lending to thermal coal is good for shareholders in 2036, who cares what our emissions targets are (which continue to fall per capita)? Maybe this is industry and regulator working hand-in-hand?

The market has always been the best weighing mechanism for risk. Unfortunately, for the last two decades, global central bank policy has gone out of its way to prevent the market from clearing. Now it seems that the authorities are taking actions that look like collusion to bully the ratings agencies into marking down legitimate businesses that are being punished for heresy.

This will ironically only make them even better investments down the track when reality dawns, just as CM pointed out with anti-ESG stocks. Just expect the entry points to these stocks to be exceedingly cheap. Buy what the market hates. It looks as though the bureaucrats are set to make fossil fuel companies penny stocks.

EU – 1.3m abortions, 5m births p.a.

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Eurostat statistics on abortion reveal that Germany, France, UK, Spain and Italy alone terminate a combined 760,000 fetuses per annum. Across the EU-28 there are 1.25mn terminations. Without getting into a debate on abortion rights, the pure statistical number points to 20.4% of fetuses never make it out of the womb alive. Every. Single. Year. At that rate over 10 years that is 12.5 mn children that could have added to EU population sustainability do not occur but the EU seems to think embarking on mass migration is the only solution to plug the gap. Is it? Ironically child support is one area the EU is happy to cede control to individual Member States.

The fertility rate across the EU-28 is now 1.58 children per woman, flat for the last decade and down from 2.9 in 1964. Demographers suggest that a fertility rate of 2.1 is required in developed world economies to maintain a constant population (in the absence of any migration). The number of live births in the EU-28 peaked in 1964 at 7.8 million. In 2017 this had fallen to 5 million. There was a brief period (2003-2008) when live births in the EU-28 started to rise again, returning to 5.5 million by 2008 but the GFC sent it down again – as economic hardship tends to cause a decrease in births. So are economic incentives too low to cause a rebound?

France has the best incentives for children and the highest birth rate inside the EU at 2.0 up from 1.7 in the 1990s. Germany is around 1.4 drifting from 1.6 in the 1990s. The lives for child rearing French are eased by cheap health care, inexpensive preschools – for infants as young as 6 months old – subsidized at-home care and generous maternity leave. Mothers with three children can take a year off of work – and receive a monthly paycheck of up to €1,000 from the government to stay home. Families get subsidized public transportation and rail travel and holiday vouchers.

In order to stop the declining working population over time, imagine if Europe hypothetically put the onus back on consenting couples to take responsibility for their actions and makes abortions harder to access without compulsory consultation over options? Why not graphically show the entire process to get some sense of reality for both parties? You can gross yourself on this link.

Perhaps, in today’s electronic world, automatically deducting child support from fathers that run from responsibility might make sense? Why should the state pay for others’ lack of accountability? Even if the child is placed in foster care, why not wire child support to foster parents indirectly via the Ministry in charge of its administration? The population crisis is not going away in Europe. Why not provide more incentives to married/same-household couples?

Mathematically speaking the numbers are huge. Imagine if the million-plus fetuses every year had a vote to be raised with foster parents as opposed to being terminated, what they would choose? Consider the €23bn Merkel has spent on mainly economic migrants in the last 2 years being put toward preventing 200,000 abortions in Germany over that period? €115,000 to avert each one might have been better spent. That is a huge sum of money period.

CM is not advocating control over the womb but surely transparency in policy over individual responsibility is not a bad thing with respect to many issues, not just abortion. What level of economic incentives are required to prevent some couples/women choosing to terminate? Surely that plays a part in deciding to terminate. Consultation services with respect to the subject don’t seem too commonplace or at least structured in such a way as to prevent them.

According to Eurostat, since 1964 the divorce rate in EU-28 equivalents has doubled and the marriage rate has halved. For every eight marriages in 1964 there was one divorce, now there is one divorce for every two marriages.

The proportion of births outside of marriage now stands at 40%, from 27% in 2000 to less than 7% in 1964. 8.8 % of the EU-28 population aged 20+ lived in a consensual union (de-facto). In Japan the number of births out of wedlock is 25% according to the MHLW. The dynamics of the traditional nuclear family are fading.

51% of the Swedish population is now single household. 51%! While some is attributed to an aging population, 19 of the EU-28 members has a single household ratio of over 30%. 12 over 35%. By way of comparison, Japan’s single household ratio stands at 34.6% from 27.6% in 2000.

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To further analyse the new ways of living together and to complement the legal aspect, statistics on consensual unions, which take into account those with a ‘marriage-like’ relationship with each other, and are not married to or in a registered partnership with each other, can also be analysed.  Sweden (18.3 %) has the highest rate followed by Estonia (16.4 %), France (14.3 %) and the lowest in Greece (1.7 %), Poland (2.1 %), Malta (2.5 %) and Croatia (2.9 %).

Is employment a factor?  It is mixed. Eurostat reported in Germany, the fertility of non-employed women has increased and that of employed women decreased, while in Spain, the opposite occurred; in Greece, the total fertility rate (TFR) of non employed women fell below that of employed women, changing from a positive differential of about 0.2 average live births.

Is education a factor? Apart from Nordic countries (Denmark, Finland and Norway), Portugal and Malta, in general, women with lower education had higher TFR between 2007 and 2011. Eurostat state the fertility of women across the EU over the same period with a medium level of education dropped by about 9%, while the decrease for women with high or low education was less significant.

Eurostat argues that economic recessions have correlation to falling child birth rates. Apart from the direct impact of economic crises at an individual level, the economic uncertainty that spreads during periods of hardship seem to influence fertility. From this point of view Eurostat believes the duration of a crisis may play an important role and, the duration and the depth of the current recession are unprecedented in some countries. The agency states,

The expected relationship is that negative changes in GDP correspond to negative changes in the TFR, possibly with some delay, thus showing a high positive correlation at particular lags. The correlation with the TFR is relevant in Spain and Latvia without any lag; in Bulgaria, Poland and Romania with one year of lag; and in the Czech Republic, Denmark, Estonia, Greece, the Netherlands, Finland, Sweden, Iceland, Norway and Croatia with two years of lag. Taking the overall average across countries, a change in GDP is mostly positively correlated with a change in the TFR within about 19 months.”

Do we cynically argue that stagnant child birth rates aren’t just a factor of societal changes? Perhaps a truer reflection on the higher levels of poverty in the EU since GFC and the harsh realities for a growing number of people behind the growing levels of populism who are suffering greater economic hardship than statisticians are presenting to the political class? Hard decisions must be made before they are made by external factors.

World government – why it would never work and why you shouldn’t want it to

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World government. Some criticise the US move to hobble the UN via funding cuts as justification for it. Some argue that international laws cramp the style of just about every government under the sun so those with power go out of their way to prevent it. The same people argue that the UN should be democratized and nation states should submit to international law and independent institutions set up to enforce it.

Presumably within this Marxist manifesto there should be no borders and total freedom of movement. However within this socialist dogma not one has put forward how it might work economically which is probably the best signal that it would fail to be a sustainable form of government. We’ve had multiple attempts at socialism and in every case it has failed. Oh how the left championed Chavez as a model of successful socialism. How quiet they are now. Still it doesn’t prevent them extolling the virtues of ‘equality’ even if some pigs are more equal than others.

Still suppose we entertain the prospect of a world government. We have to start somewhere. Regardless of whether we like it or not, a world government would need to address economic status to sign up willing participants. The US economy is 24% of world GDP with less than 5% of the world’s population. In order for the US to agree to join a world government they would rightly demand that they get 24% of the seats in a world parliament? Why would they join at 5%? What is the incentive? Virtue? Australia has a disproportionately large raw materials base relative to the population. Should the Aussies have just one vote if it ends up benefitting others more than itself?

We have a living working example of how fusing completely different economic systems doesn’t work, even when the population speaks the same language – German reunification. From Der SPIEGEL,

Today, the eastern German economy is still in a sorry state, and there are no indications that the situation will change. An estimated €1.3 trillion ($1.6 trillion) have flowed from the former West Germany to the former East Germany over the last 20 years. But what has that money achieved? Historic neighborhoods have been restored, new autobahns built and the telephone network brought up to date, but most of the money was spent on social benefits such as welfare payments. The anticipated economic upswing failed to materialize…Most of eastern Germany has turned into an economically depressed region that lags behind the west in all respects:

The per capita economic output in the east is only at 71 percent of the western level, with a disproportionately high share of economic output attributable to the public sector. The economic output generated by the private economy is only at 66 percent of the western level.

To close the gap, the eastern German economy would have to grow more rapidly than in western Germany, but precisely the opposite is the case. Germany’s leading economic research institutes expect the economy in eastern Germany to grow by 1.1 percent this year, compared with 1.5 percent in the west.

Since the fall of the Berlin Wall, the population of eastern Germany has declined by almost 2 million people, a trend that is continuing unabated.

The proportion of household income derived from welfare payments is 20 percent higher in the east than in the west.

Of Germany’s 100 largest industrial companies and 100 largest service providers, not one has its headquarters in eastern Germany.

The lesson is clear. When given a choice, the citizens of the former socialist state stampeded to the capitalist state because they knew ‘opportunities’ were far more abundant and desirable. The power of the free market. What better indication of a repudiation of socialism than those that have actually lived under it. Many ‘socialists’ today (who ironically have never experienced it) are envious. Indeed former PM Baroness Margaret Thatcher put it best, “the Labour Party would prefer the poor were poorer provided the rich were less rich” Instead of enterprise and looking for ways to get ahead, many sit back and complain why it isn’t handed to them on a platter.

So in the case of world government without borders, it would make complete sense for people from say Africa or the Middle East to move to NY, London or Berlin. As they left their homes in the millions, sheer logistical issues would come into play – housing, food, healthcare and sanitation. The only way to ration scarce resources would be to let the free market decide it. World government wouldn’t allow it. Shouldn’t a Congolese family have a claim to live in a penthouse on 5th Avenue or Mayfair in the interests of equality? Maybe the owners of the 5th Avenue apartment should have the property repossessed to promote equality. Surely a noble gesture for the other 99%.

What about filling the world parliament? How do we look to address balance? The Indians and Chinese represent 35% of the global population. Should they not occupy 35% of the seats? Is there a global vote? As an Australian do I get a say on the Chinese candidates? Do they mine? Assuming we had global votes, language barriers would be a problem. How would an English speaker be able to work out the depth in abilities of a Chinese candidate from Harbin who only speaks Mandarin? Even if we could translate his every word, what hope would we have of delving deep into his or her history or the subtleties of cultural ‘meanings’ hidden within language to be able to cast a ballot on as fully informed a basis as possible?

Or should we cut the pie of global government candidates based on religious grounds? Muslims represent 24% of the population. Should all countries submit to having 24% of the laws made by a global government Sharia compliant? Christians represent 31% of the globe. Should they have the right to enforce the world to take Christmas as a public holiday? If the international parliament votes to repeal Ramadan should it stand? Afterall that is the result of a properly functioning global democracy!

Some in favour of the UN being the ‘social democracy’ that binds us honestly believe that it would not fall foul of greed, corruption or poor governance. Do we seriously wish to put power in the hands of the UN as our global government if one of its groups thought the murderous dictator Robert Mugabe was a worthy ambassador for WHO? Do we think the UN to date has shown exemplary governance and ethics to provide a comfort level for we minions to hand over our regulatory frameworks? Take the former UNIPCC chair who directed UN procured funds toward his own ‘scientific research body’. Conflicts of interest anyone? The UN argues it is independent but how could it be if it is so self serving? To think there was a strong suggestion that the UN deploy blue helmets in Chicago to help quell gun violence. The question one should ask is why wasn’t such action taken when Obama was president? So much for a guarantee of independence if the UN so blatantly takes sides because they want to retaliate against Trump.

We already have a preview of world government policy looks like. Many Western governments are already pandering to political correctness in ways which are causing growing backlash among constituents.

Some on the left believe that nationalism is a “backward, regressive, half-baked ideology which is used by ruling elites to control their populations” Wasn’t the open minded Labour heartland in the Midlands one that leaned to Brexit? Wasn’t it in France where Marine Le Pen’s Front National doubled the number of voters ever seen for her party? Was it not Hungary that voted 99.4% in favour of a referendum to reject forced migration quotas? The surge in the AfD in Germany to 14%. The huge landslide in Austria where the young PM has given his immigration portfolio to the FPO? The surge in the eurosceptic 5 Star Movement in Italy…the list goes on. Even Switzerland handed back its free pass to join the EU (which is about as close as one gets to a world government) because it puts sovereignty and the wish to preserve culture and customs ahead of ‘socialist’ ideals. Isn’t that patriotism rather than nationalism? Lukas Reimann of the Swiss People’s Party, said:

It is hardly surprising that the EU looks like an ever less attractive club to join. What, after all, is the appeal of joining a club into which the entire world can apparently move?”

So what would a world government do to combat nationalism? Regulate against it! Restrict freedom of speech. Incarcerate those that protest against what they perceive as injustice. Of course it would be easy to simplify these people as racists or bigots for not conforming. The price of progressivism is to muzzle dissent. Identity politics and the victimhood it breeds are so pervasive that it creates the exact division it seeks to stop. For  those pushing for world government make no mistake that the elites among the commissars will still be more equal than others.

What is wrong with celebrating differences?  Isn’t visiting a foreign country to immerse oneself in a different culture half the fun of an overseas vacation? Learning about how civilization developed over millennia. Experiencing foreign cuisine, learning a foreign language or respecting local customs (e.g. wearing long sleeves and pants into a Buddhist temple) are not things to be frowned upon. They are exactly the reason why all of the tribes of the world can’t be homogenized into the one box. Yet the world government wouldn’t tolerate such thinking.

If everything is so great then why is our political scene so broken?

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Queensland’s state election said it all. Both the incumbent parties lost massively even though the incumbent Labor Party looks like holding on to power. While Pauline Hanson’s One Nation party looks like it fared poorly in terms of seats it still got 13.8% of the vote from 1% in 2015. Forget the headline results but think of what the political turmoil In local, state and federal levels is telling us more broadly.

Think logically about it all. If the economy is booming, jobs are abundant and prosperity is on the march then there is little need for governments to be running deep deficits let alone facing hung parliaments and acts of desperation. Surely the incumbent governments of the day can laud their own achievements and their constituents would happily keep returning the status quo. The majority should continue to be happy. More by rights should be winners in such a world of record housing prices, steady wage growth, low unemployment and 25 years of economic growth as experienced in Australia.

Yet PM Turnbull turned on many of the traditional supporters of the conservative wing of his Liberal National Party (LNP) coalition who turned their back on him to hand Labor the victory in Queensland. Not so fast Prime Minister. They didn’t leave the party. The party under your incompetent stewardship left them. At all levels the LNP is divided. There are some quarters suggesting that the Nats may split from the Coalition in the next election in Queensland to leave the stench of the Liberal Party to themselves. This is when personal ambition trumps wish to serve a nation.

While the LNP was handed the most valuable and recent lesson of the disaster that was the Rudd-Gillard-Rudd internal factional knifing during their time in power, it completely buried its judgement and started following a left leaning press, weak poll numbers and copied Labor’s folly. Now we have a hung parliament (not withstanding the dual citizenship fiasco) with chronically weak and misguided leadership. One that tells voters that they have no clue rather than introspection that the party may indeed be the problem.

It used to be said that Australia enjoyed the most stable politics in the Asia Pacific region. That encouraged foreign investment and gave Australia low interest rates, a superior credit rating and a regulatory platform that ensured trust (important for corporations), the envy of many nations. Yet inside a decade we have had 5 (soon to be 6) prime ministers which has thrown that ‘reputation’ in the toilet. In a world where international capital is more mobile than ever and asset prices are peaking, instability in government eventually carries severe financial market penalties.

For Aussie banks, levered up to the gills with inflated mortgage books on their balance sheets, such things have negative implications for the 40% reliance on global wholesale credit markets to fund themselves in the face of a tightening US interest rate cycle. Do not underestimate the negative connotations of a federal government that has lost its way, no matter which major party is in power. Where the average Aussie can’t bear anymore on the mortgage, a third admitting they can’t pay the home loan if they lose their job for 3 months or more. Almost 1,000,000 Aussie households would be in severe mortgage stress if rates moved 150bps(1.5%). Think of the spill-over effects on consumption which would only lead to a recession and lay offs, exacerbating a cycle, all the while bashing the currency making international funding even more biting. If only we had a stable government that had a decent fiscal position to weather that storm. Oh, that is right we squandered that in 2008.

One Nation in Australia, AfD in Germany, Party for Freedom in The Netherlands, Front National in France, 5 -Star Movement in Italy, Fidesz in Hungary, FPO in Austria, the Sweden Democrats, Vlaams Belang in Belgium,  Progress Party in Norway, Trump, Brexit…these patterns aren’t random. It isn’t just populism but protest votes to establishment parties that aren’t delivering. While we are constantly told how great our lot is, sadly the gap between haves and have nots is widening globally. Politicians who are ditching political correctness and making waves on publicly uncomfortable issues are thriving. Why could that be?

Donkey (informal) votes in Australia have seen numbers soar from 2.2% in the 1950s to over 5.0% in the 2016 election. Some electorates in NSW saw as high as 14% informal votes. These are powerful messages in a country that has compulsory voting, which has slid to 90.9%.

The sad reality is that the electorate is making louder noises every election that things are not pointing in the right direction yet the muppets are still being returned to their box seats on a dwindling majority. Why? Because not enough voters are heeding the warning signs that are sounding in front of them. Of course politicians still continue to sell comforting lies backed by ever more unaffordable promises to keep themselves in power for as long as possible when we all need to be facing the unpleasant truths that will happen whether we like it or not.

Indeed those deplorables who voted One Nation might have spurned the LNP but not without good reason. In time, they will be viewed as the wiser ones. Not because they necessarily believe in Pauline Hanson’s platform but because they believe in Turnbull and Shorten’s even less. It all rings like a Premier League football coach making a litany of excuses for his team’s woeful performance that ignores the fact that the collection of individuals have absolutely no cohesion as a team. All the fans can do is bury their heads in their hands until the point they can’t bear to watch another game until the coach is sacked.

Merkel presides over worst outcome since 1949

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Angela Merkel’s CDU/CSU looks to have sealed the largest support but it is her party’s worst showing since 1949. While much of the press is hailing her 4th term one can’t dismiss the rise of the Alternative for Deutschland (AfD) which looks to cement in the third spot with around 14% (c. 6 million votes). In the 2013 election AfD only managed 4.7% (c. 2mn votes) which was below the 5% threshold required to take seats in the Bundestag. Zero seats then, Now looking at 95+.

As CM wrote on Nov 21, 2016,

Think of the coming German elections in 2017 as more like Australia’s recent federal election where Liberal Party PM Malcolm Turnbull scraped home with the protest vote going to smaller parties such as Pauline Hanson’s ultra conservative One Nation Party…Merkel’s power will be greatly cut back as she is forced to pander to the reduced majority and harder line elements the results of recent state elections have borne out clearly.”

While we are already hearing the major parties refusing to form a coalition with it (much like those Dutch parties refusing to team up with Wilders’ Party for Freedom) the message is clear. More voters are sick of the political hand wringing that glosses over issues that concern them. It was the same for Le Pen. Yes, she lost to Macron but she doubled the share of the vote of her Front National party to a record – more than twice as many cared for her platform. Trump’s win. Brexit. The Italian 5 Star Movement. The Italian referendum. The Hungarian referendum. The Dutch election. All showing large shifts toward ‘national’ interests. Why?

It doesn’t matter how far-fetched some might feel the views of people who are voting for ‘nationalist’ platforms may be, the reality is that the counter arguments and actions taken by the current crop of the apologist political class isn’t cutting through. The only way many can express their frustration is at the ballot box. Hence we get Merkel’s worst showing. Yet when political parties say they ‘refuse’ to partner with it, how can they realistically alienate a party that represents 14% of the country? The mainstream media pillorying the supporters of right wing parties are part of the problem. They are made to feel ashamed for holding legitimate  concerns so all that happens is they get pushed underground and resurface at election time. This is why opinion polls have become largely meaningless.

In Merkel’s case what did she expect when she tried to gag the media and police in Cologne on New Year’s Day to cover her gross misguided altruism? To then support the Mayor of Cologne’s suggestion that German women dress more appropriately so they won’t be pestered spoke to many as such a limp wristed response to common decency. Germans are fair minded people but they cannot be expected to sacrifice hard earned freedoms for some who treat their generosity with utter contempt. Hearts and minds can’t be one by political correctness which seeks to segregate swimming pools and encourage citizens to keep an arms distance from certain groups to avoid unsolicited contact. No wonder the hard talking AfD has taken advantage of this weakness.

Before the trolls scream “racist, Nazi or bigot” we must ask ourselves why these large shifts? Put simply, more people are wanting action over problems they are not being addressed by the political class.

In Germany, political violence has been at record highs. The domestic intelligence agency, the Verfassungsschutz (BfV), reported  in Germany’s 2016 Report on the Protection of the Constitution, the number of left-wing extremists climbed last year, rising to 28,500 — the highest figure since 2012. It said the number of right-wing extremists was 22,471, about one-quarter of whom were neo-Nazis.

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Surely such demonstrations pointed squarely at politicians failing to be open and frank about issues. Talking about truck drivers ramming Christmas markets or shooting up Munich shopping malls as isolated events doesn’t fool anyone. Perhaps the most disgraceful cover up was the camera footage of three Bulgarian migrant thugs who kicked an innocent German female down some subway stairs where she broke limbs. The man who released the video as evidence of the lack of action taken by authorities was arrested for breaching privacy laws. It is like charging a home owner for knocking out a thief trying to break and enter.

Chalk this up as another loss for the political establishment.

 

 

Macron has boarded a modern day Titanic but Le Pen has stolen over a third of the life boats

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The Titanic was most infamous for being an unsinkable ship. We all know the tragedy of its maiden voyage. Folklore tells us that to calm the passengers, the band played as the ship went down. The cautionary tale is one that fits the EU almost too perfectly. Macron’s win is akin to the EU playing the band (well Macron did play the EU anthem for his victory speech rather than La Marseillaise) all the while the Hard Brexit iceberg has ripped a huge hole below the waterline of SS Titanic II. The problem is the EU continues to behave as if the SS Titanic II is indeed unsinkable. Le Pen’s loss is much like believing the water tight compartments will keep the ship afloat. They couldn’t be more wrong as chief designer Thomas Andrews told White Star Line boss J. Bruce Ismay – who protested she was unsinkable- “She’s made of iron, sir! I assure you, she can… and she will. It is a mathematical certainty.”

The SS Titanic II’s crew treats its customers with varying levels of service. It entertains Lady Merkel and Lord Macron in proper first class fashion but for steerage passengers like the Greeks, Spanish and Portuguese they are kept locked below deck. The Greeks were willingly given passage on the SS Titanic II in full knowledge they possessed forged promissory notes as they boarded. The belief was that when they landed on the other side of the Atlantic they’d be able to work it off. Sadly the crew has finally realized it is futile and are now demanding they hand over whatever they have left before handing out life jackets. Moreover they must promise if they’re let out of steerage they must stay chained to the Master at Arms.

In all seriousness the treatment of the Greeks is despicable beyond words. 36% of Greeks live below the poverty line. 58% youth unemployment. That means many can’t access affordable healthcare because it is generally provided by corporates and when you lose a job you lose the healthcare. This means many are forced to use A&E of major hospitals which are now overcrowded and understaffed as more doctors are leaving to seek better fortune for their services elsewhere.

If that wasn’t enough, mothers who had given birth were being restricted from taking their new-borns home if they couldn’t pay the fees. While the government has banned this practice they have introduced new laws to allow the seizure of assets (e.g. homes) if debts are not settled.

Naturally the EU wishes to keep control over the way Greece handles its economic affairs but using the nation’s defiance of autocratic rule from Brussels as a weapon against it shows how little the federal state truly cares for its members. Deeds, not words. It promised to punish steerage countries, Spain and Portugal, for breaching debt covenants. This is the real EU. It is a supranational. A federation through the back door.

The Brexit vote is without a doubt the most damaging iceberg for the EU. The gaping hole it exposes is far more serious than any perceived phyrric victory through Macron’s win.

The issue here is that if Hard Brexit (May is likely to get the majority she needs on June 8th to push for it) is shown to work for the UK (likely) and the idea of extortionate exit penalties are legally unenforceable (confirmed last week) then the risks of jumping ship are sharply lowered. The problem for the EU is that there won’t be enough life boats to save all the crewreaucrats when more member states realize self preservation is the only viable option.

Le Pen’s 1/3rd of the vote, Hofer’s 46% in Austria, Wilders’ 25% increase in seats in The Netherlands, the Sweden Democrats jump to the top of the polls, Italy’s ousting of Renzi, Brexit, the Swiss handing back a 30yr standing free ticket to join…these don’t look like promising trends for an EU which is already badly listing. Despite ample warnings the EU refused (and still refuses) to change its course or exercise due care.

Will Captain Juncker go down with his unsinkable ship or follow Seamen Martin Schulz off before it is too late?

“You stink!” How the EU could learn from the same denial as musicians and journalists.

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“We miss you already.” Those words spoken by President of the European Council Donald Tusk ring deeper than mere sentiment. As much as the almost year long debate of preventing the triggering of Article 50, PM Theresa May has respected democracy. Whether the musings of Sir Bob Geldof, the legal challenges led by Gina Miller or paying attention to polls that showed some wanted to change their original Brexit decision, the UK is doing the right thing. If it is any consolation one can only hope that the EU understands that it is the problem. Was the EU such a no brainer club to be a part of the UK would happily stayed by the campfire singing kumbaya. Did the EU forget the Swiss recently handed back their decades long free pass to enter the EU?

I’ve worked in several organizations where management was in denial. I’m sure many of you have too. When faced with crisis, some managers choose to point to external factors rather than a lousy product offering that no longer matches the needs of the firm’s clients. It is no different in the world of music or journalism.

Musicians used to make a killing on selling albums but Napster opened people up to the idea that you could buy the one song you liked rather than splurge on a whole album which you didn’t. Customers were offered a service which enabled them to choose and they fell in love with the concept. Yet many artists howled at the injustice of no longer being able to live the life of self entitlement. Look at music today and how many artists end up doing stupid stunts to hog the limelight. As the CEO of Avex in Japan said, “Music has changed. Pikotaro’s Pineapple-Apple-Pen has been viewed 100s of millions of times. Ask yourself why?” It is hardly a reflection of musical talent of the likes of Mozart or The Beatles

Journalism is also guilty of denial. The internet has allowed readers to discriminate what they read. Is it any wonder that NYTimes “60% off limited time offer” continues on and that The Guardian has passed around the Guide Dog collection box to keep its product alive, ignoring the fact that it is the ‘poor content’ which attracts users unwilling to pay. Yes, The Guardian is now a charity. To turn the argument on its head, for all of the hatred hurled at Fox News, more people pay for it’s content than CNN and MSNBC combined. Put simply, if people value content they will pay for it.

So to the EU, it is time to realize your product stinks. You can’t forever snub your member states with the same old mentality and expect to thrive. Europe has had a checkered history, Cross a border and the language, culture, cuisine and way of life are vastly different, To try to tell these same people they are “one” is utter insanity. To preach ‘diversity’ is irrelevant. Diversity is about respecting difference yet the ideology essentially preaches there Should be none. Yet the EU is the very antithesis of equality. The EU is happy to sit by and bury Greece’s chance of recovery by imposing hardships until they cede their democracy to Brussels and accept a protectorate status, The founder of ‘democracy’ is forced at gunpoint to hand it over when it was indeed the EU that used Goldman Sachs to fiddle its finances to create cooked books that would allow entry. To threaten Austria that if it democratically elected a right wing President that the EU would remove voting rights. That Italians voted on a referendum as a way to oust a pro-EU prime minister rather than the actual question on the ballot paper. That for all the celebrations and clinking of crystal champagne flutes from the German Foreign Ministry at the Dutch election result failed to realize conservative parties trounced the left. The idea that Wilders was going to PM was never going to happen. Yet he won more seats. Rutte only managed to stem his losses by adopting Wilders-lite.

The reality of Brexit is now formal. It finally seals a promise. It is a message from Brits who have saved Europe countless times that they cannot be part of a group that won’t listen. That individual mistakes like Merkel’s open borders should be a German problem. Why should Hungarians, Brits or French be forced to take a share of the burden of a mistake made by one individual member state? If the EU had voted to do it in a democratic fashion one might have had some sympathy but this was a mistake and it is unfathomable that the EU seeks to appease Merkel for imposing misguided altruism on countries that don’t share her view. It is this type of action that seals the EU’s fate. The idea of one Europe is fantastic. The practical realities are anything but. President Tusk perhaps said more about the introspection that is well overdue in the hallways of Brussels.

Let’s be clear President Tusk, the British do not miss you.

5-Star Movement surges in Italy

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M5S has overtaken the ruling Democratic Party (PD) in the most recent poll. An EMG poll shows Beppo Grillo’s party taking 30% of the popular vote, with PD on 27%. M5S is a Eurosceptic party.

An interesting blog from 5-Star Movement’s (M5S) head Beppo Grillo. He has been convicted himself so can’t run for parliament but he gels with many Italians for his insults and barbs of incumbent politicians. To understand the M5S is to know that none if its members can be current/former career politicians. This blog sort of speaks volumes as to why the NO vote won today.

It is not hard to work out why Italian’s rejected the status quo, especially in the south which I wrote earlier was responsible for the highest referendum rejection levels throughout Italy. As Grillo writes,

Sicily is on the verge of being without water. A state of emergency has been declared in Messina. 259,000 people are without running water. In Gela, they just get water once a week. In Agrigento the provision of water has been suspended because of the presence of bacteria.

Water in Sicily is managed (if you can say it’s managed at all) by a private firm (Siciliacque, 59.6% of which is owned by the French firm, Veolia) to whom Cuffaro gave the job of managing it for 40 years. The wishes of the citizens expressed in a referendum on the management of water, were completely ignored. There was a similar situation in Campania, where nine towns were without water yesterday. We have to return to the public management of water. The leaking network needs to be brought back to a good state with investment from the public purse and the risk of hydrological disturbances has to be eliminated as these disturbances are destroying the reservoirs. This is what Italy needs, but instead we are now being taken for a ride with the umpteenth announcement from someone who seems less like a statesman and more like the comic character lngegner Cane from the Gialappas, talking about the construction of the bridge over the Straits of Messina.

A mammoth task that will never see the light of day. It has already cost the tax payer about 600 million euro and 3 years ago the Monto government allocated 300 million for the payment of penalties if the project is NOT completed. According to the economic plan approved by the Board of Directors of the company called Stretto di Messina Spa on 29 July 2011, the overall cost of the project was to be 8.5 billion euro, which is half what’s needed for the Citizens’ Income with which the M5S will save 10 million Italians from hunger and unemployment. Up until now, a bridge measuring 3,000 metres with an aerodynamic profile has never been built. There’s no certainty that it will stay standing and especially in a zone that has a high seismic risk (do you remember the Messina earthquake?) and really strong currents. The news about the construction of the bridge is just a way of taking us for a ride. It’s useful to the PD to have something to talk about on a talk show and to cover up its every day failures. It’s useful to the mafia to open up construction sites that will never get closed down and that will cost a further hundreds of millions to the citizens who are now experiencing thirst.”

He followed up this blog which threw stones at convicted politicians still siphoning off the public purse.

Enough!

Clean up Parliament!

We’ve had enough! Clean up Parliament!

Members of Parliament cannot represent citizens if they’ve been convicted by the courts.
And if the law allows it, the law needs to be changed.

The thousands of citizens that subscribed to Beppe Grillo’s appeal on his blog http://www.beppegrillo.it and ask that those convicted of a crime should not represent citizens in any Parliament any more, starting from the European Parliament.

It’s profoundly immoral that they are allowed to represent us.

Below is the list of names of Italian representatives in the Italian and European Parliaments that have been convicted of a crime:

Berruti Massimo Maria (Member of Parliament Forza Italia)

Biondi Alfredo (Member of Parliament Forza Italia)
The guilty sentence that was given by the Genoa court to Alfredo Biondi was taken away on 28 September 2001 because the crime was abrogated.

Bonsignore Vito (Udc – Member of European Parliament)

Borghezio Mario (Lega Nord – Member of European Parliament)

Bossi Umberto (Lega Nord – Member of European Parliament)

Cantoni Giampiero (Member of Parliament Forza Italia)

Carra Enzo (Member of Parliament Ulivo)

Cirino Pomicino Paolo (Member of Parliament Democrazia Cristiana – Partito Socialista)

De Angelis Marcello (Member of Parliament Alleanza Nazionale)

D’Elia Sergio (Member of Parliament Rosa nel Pugno)

Dell’Utri Marcello (Member of Parliament Forza Italia)

Del Pennino Antonio (Member of Parliament Forza Italia)

De Michelis Gianni (Nuovo Psi – Member of European Parliament)

Farina Daniele (Member of Parliament Rosa nel PRC)

Jannuzzi Lino (Member of Parliament Forza Italia)

La Malfa Giorgio (Member of Parliament mixed group)

Maroni Roberto (Member of Parliament Lega Nord)

Mauro Giovanni (Member of Parliament Forza Italia)

Nania Domenico (An)

Patriciello Aldo (Member of Parliament Udc)

Sterpa Egidio (Member of Parliament Forza Italia)

Tomassini Antonio (Member of Parliament Forza Italia)

Visco Vincenzo (Member of Parliament Ulivo)

Vito Alfredo (Member of Parliament Forza Italia)

Previti Cesare (FI)

To read the charges See below:

Three new entries in Clean Up Parliament. I know. I know. I’ve cottoned on late. A few of you have already given me the information. But it’s difficult to stay on top of all this coming and going of convicts in Parliament. Now we’ve arrived at twenty. The judicial route to politics. That’s what we’ve got to. To delinquents who make laws after having violated them. Well then, I’m saying this softly softly to these twenty people: GETOUTOFOURHAIR!

If they want to make a new life for themselves, let them do it with discretion, far away from the media. No one will say anything to them. There are so many other activities other than representing the citizens. Listen to D’Elia in the evening News programme “redeemed and in Parliament”. This isn’t democracy. It’s being taken for a ride. And the same is true for the other 19. The crimes are not all the same. But anyone who has been convicted should have the honesty to do something else, to go somewhere else. Not to sit in Parliament and make the citizens give them a living. To end up, here are the new convicts:

– Borghezio Mario (euro parliamentarian Lega Nord): convicted of setting fire with aggravating circumstances as an act of discrimination for having set fire to mattresses of some immigrants from outside Europe who were sleeping under a bridge in Turin. He was sentenced to 2 months and 20 days in prison but this was changed to a fine of 3,040 Euro.

– De Angelis Marcello (senator AN): convicted and sentenced to 5 years in prison for being in an armed band and for subversive association as an important member of the neofascist group, Terza Posizione.

– D’Elia Sergio (member of the Lower House, Rosa nel Pugno): convicted and sentenced to 25 years for being in an armed band and for collaborating in homicide. He was a leader of Prima Linea and participated in the planning of the assault on the Florentine prison delle Murate. On 20 January 1978, it was attacked and one of the prison officers, Fausto Dionisi, was killed. As soon as he was elected as a member of the Lower House, he was nominated by the Unione as Secretary of the Lower House.

It is so easy to see Beppo Grillo’s appeal to the Italians. M5S is pointing out the obvious blindness displayed by the incumbent politicians and his broom across the Italian flag shows exactly why the EU should be worried. The Italians care less and less about the Eurozone. They are next in line to be treated like the Greeks. If Mr Schauble gets his wish for the Greeks to leave the Eurozone then don’t expect the Italians to pick up the mantra as whipping boy of the EU. They’ll happily express vafunculo and a word of warning to the EU – they’ll mean every bit of it.

What is the top worry for each country?

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An interesting table. Some would have you believe that saving the planet is the number one worry on everyone’s mind. However like so many polls taken when the economy is in the dumps people naturally retreat to saving themselves. Nothing even peacenik Canada is scared of Mother Nature. Unemployment is the #1 concern for Candians according to an Ipsos report from Nov 2016 the same as Spain & Italy  (youth unemployment at 58% and 56% respectively), Saudi Arabia, France, and Australia. Poverty tops the worry list in Japan, Germany, Russia and Belgium. South Americans (Peru, Mexico, Argentina) are most worried about crime with peace loving Swedes clearly sharing  the opposite view of their socialist government’s progressive policies. Korea unsurprisingly worries about corruption as does India. As Brexit proved, Brits are worried about immigration control. Americans are concerned about terrorism. The Chinese aren’t worried about climate change but threats to the environment aka pollution. In fact no country listed climate change.

Hang on? Australia? Unemployment? Well actually it makes perfect sense. A recent ME Bank survey in Australia found only 46 per cent of households were able to save each month. Just 32 per cent could raise $3000 in an emergency and 50 per cent aren’t confident of meeting their obligations if unemployed for three months.

In Japan, poverty is a concern and rightly so. As I wrote in my crime series last year, this law abiding country has huge problems. Maybe from very low rates but the relevance is great. Retirees make up 1/3rd of all crime and the government has expanded prison capacity 50% top house all the elderly inmates who are creating another headache – the Ministry of Justice needs to go cap in hand for extra budget to cover the soaring health costs behind bars to look after its guarded nursing homes. Domestic violence is soaring as is child abuse. The Japanese National Police Agency had to create a new category for DV caused by divorced couples living under the same roof because economic hardship prevents them living separately.

Even Germany has a poverty problem despite what Angela Merkel would have you believe,. Yes, the low unemployment masks the fact that her party has doubled the size of the public service top 18% of the entire workforce since 2006.

America cities terrorism as the biggest threat but a Jan 2017 IPSOS poll showed “overall, 58% of Americans believe that the country is headed in the wrong direction, with Republicans (61%) and Democrats (56%) having a fair amount of pessimism. More Independents (67%) believe that the country is off on the wrong track. The economy remains at the top of the list of the most serious problem facing the United States, at 19%. ” Environment is way down the list at 5%. Yes, this is pretty much a carbon copy of the poll I saw at the time of GFC and the tech bubble collapse in 2000. When times are tough people aren’t worries about saving the planet but saving themselves.

The peace loving open minded multi-cultural Swedes are most concerned by its populace. I wrote last month that “the Sweden Democrats seem to be resonating with a public that is fed up with the establishment. Their conservative views are made pretty plain in the campaign posters which cover train stations etc. I have to say full marks for not withholding punches about who is behind the ‘mess’. Sweden’s long standing liberal views on immigration have backfired. In 1975 it opened its borders to actively chase multiculturalism. In recent months though Sweden has asked its neighbours to take refugees off their hands which provoked a response from Denmark’s Immigration Minister, “’The Swedes put themselves in this situation. They have pursued a very lenient immigration policy for years and they are to blame for the swamp they are in.”

Left wing politician Barbro Sörman tweeted the difference with migrants commiting rape is that Swedish men culturally should know better. She tweeted “The Swedish men who rape do it despite the growing gender equality. They make an active choice. It’s worse…” When contacted by a local newspaper for clarification she replied, “Take a picture of Sweden as an equal society, where all are nurtured in equality. Then you can say that if you are brought up in it, you make an active choice to not be equal, rather than if you are brought up in a society that is not equal”

Malmo has been a city often pointed to as a proxy for failed integration in Sweden. Deputy Police Commissioner Mats Karlsson said in response to multiple explosions that occur in the city on a regular basis, “Our dilemma is that we can never guarantee anything for sure. Evidently there are individuals who have hand grenades and they often resort to violence over things that may seem very banal to you or I – a conflict over an ex-girlfriend or a little brother wanting to outperform his big brother…It’s bad enough when they use guns, because they’ve got such poor aim, but grenades are really worrying. They have a 360-degree reach.”

However what ever country you live in, such polls give an underlying view and I would suggest on balance that the majority of governments are not listening once again highlighting the natural lurch to conservative parties who want to broach the mess socialist policies have exacerbated since 2008.

Does Mr Schulz’s resignation say more about fleeing a sinking EU ship than saving the Fatherland?

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EU Parliament President Martin Schulz has resigned. Just as the EU sinks deeper into the quagmire of its own making Herr Schulz seemingly wants to run against Angela Merkel for Chancellor next year.  The triumvirate of Schulz, Juncker & Tusk was supposedly inseparable but one wonders if it has become insufferable this year with the prospect of 2017 becoming even worse. Think about it – Brexit, the ditching of a free pass by the Swiss to join, the mess with Turkey over refugees, the parlous state of Greece, an Austrian presidential election that exposed the lack of respect for member state democracy by the EU, a touch and go referendum in Italy and the growing chances of a Le Pen presidency in France on top of an EU economy at stall speed with limited options.

Italy holds its referendum on Dec 4 this year. Italian politics is rarely devoid of scandal or controversy. The referendum is to do with reforming the constitution with a focus on limiting power in the Senate so laws can be passed quicker. If you believe polls, 42% don’t want change. 37% do. Referendums in 1993 and 1997 failed. PM Renzi has threatened to resign if it fails to carry. In a sense the referendum had been tracking ‘yes’ until he staked his career on it (are you listening David Cameron?) and the mood switched. Renzi thought the threat would work in his favour by alarming voters he’d throw the country into more political gridlock. The idea that Italians are “concerned by instability” is rather humorous. I am trying to work out a period when Italy had stable political leadership. Here is a list of  PMs since 1976 (all 24 of them):

1. Aldo Moro – 1974-1976
2. Giulio Andreotti – 1976-1978
3. Francesco Cossiga – 1979-1980
4. Arnaldo Forlani – 1980-1981
5. Giovanni Spadolini – 1981-1982
6. Amintore Fanfani – 1982-1983

7. Bettino Craxi – 1983-1987
8. Amintore Fanfani – 1987-1987
9. Giovanni Goria – 1987-1988

10. Ciriaco De Mita – 1988-1989
11. Giulio Andreotti – 1989-1992

12. Giuliano Amato – 1992-1993
13. Carlo Azeglio Ciampi – 1993-1994
14. Silvio Berlusconi – 1994-1995
15. Lamberto Dini – 1995-1996
16. Romano Prodi – 1996-1998
17. Massimo D’Alema – 1998-2000
18. Giuiliano Amato – 2000-2001
19. Silvio Berlusconi – 2001-2006
20. Romano Prodi – 2006-2008
21. Silvio Berlusconi – 2008-2011
22. Mario Monti – 2011-2013
23. Enrico Letta – 2013-2014
24. Matteo Renzi – 2014~

The stratospheric rise of the Euro-sceptic 5-Star Movement (M5S) could benefit from the electoral rules (Italicum law) which changed in July 2016 which grants a party that wins over 40% of the vote it wins 54% (a minimum of 340 out of 630 seats) of the Camera.

The Economist wrote of the party that aims to #draintheaqueduct “the M5S chooses its electoral candidates in online ballots. Save in municipal elections, it does not accept anyone who has served more than a term as a political representative of any sort. The intention is to guarantee that its lawmakers and office-holders are free of the compromising links that are rife in Italian politics. But one effect is to ensure they are equally untainted by experience and, sometimes, ability.” M5S is polling around 28% vs Renzi’s Democratic Party at 32%.

There in lies the rub for the establishment. Around the world, they are fast learning that political experience and ability are outweighed by the promise of change and the ability to call a spade a spade. Rome’s Mayor Ms. Raggi (M5S) has bounced from one problem to another after being left a city in deep debt and political scandal. Reality is often different to the dream.

Still if Renzi loses and he resigns, Italy maybe thrown into a snap election and if the M5S wins a majority that will have implications for the bond market. A party that looks to exit the euro will potentially raise large scale bank default risk. Holders of Italian euro-denominated debt would be stuck having to receive a devalued lira on top of wholesale dumping of Italian debt proving a double whammy. Banks are not required to hold capital against government bond holdings but such losses could well create insolvency issues. At the start of October this year, Italian 10-yr  government bonds traded at 1.2% yield. It is now 2.13%.

So the risk of the Italian referendum is perhaps being viewed by Schulz to take an emergency parachute to pursue a German state political career than his once Utopian ideal of the EU. It is telling. Surely he stood to gain much greater power in the long run if he truly believed in his beloved EU project. Resignation suggests he may believe the writing is on the wall and better to retreat to his homeland to keep what is left of a career alive. A true contender to Merkel? It remains to be seen but do not discount his move as a precursor to the dwindling fortunes of the EU movement.