Author: admin

Hundreds of Italian demonstrators gathered in Rome’s Piazza del Popolo on Tuesday, ditching their masks in a protest against the Italian government’s lockdown restrictions aimed at controlling the spread of COVID-19.

The group, which calls themselves the ‘Orange Vests,’ is led by retired Carabinieri general Antonio Pappalardo, who doesn’t believe children should be made to wear masks, according to TIME.

Refusing to wear a mask himself, Pappalardo said “These lungs mine. I will take care of my lungs. Breathing is sacred.”

The people packing the square didn’t adhere to social-distancing guidelines set by the government.

Pappalardo portrayed such containment measures as an infringement of freedom. Other speakers at the protest asserted that the pandemic ‘’never existed’’ and alleged that politicians had played it up to enhance their own powers. –TIME

Elsewhere in Rome, opposition leaders, including League Party chief Matteo Salvini, marched on Tuesday to demand that the government resign.

Unveiling an Italian flag along the Via del Corso, Rome’s central artery, the gathering soon turned into a procession led by Salvini and two other party leaders: Giorgia Meloni of the right-wing Brothers of Italy, and Antonio Tajani, who co-founded former PM Silvio Berlusconi’s center-right Forza Italia, according to France24.

According to a Facebook post by Salvini, the march was “a symbolic gesture to make heard the voices of the citizens who do not give up.”

As Italy faces the worst recession since the war, the crisis could further bolster the far-right with the country scrambling to support businesses.

“There is an immediate need for money for the Italians, yet we are promised the recovery fund in 2021,” Salvini told reporters, referring to the 750-billion-euro European recovery plan.

“There can be no forgotten Italian workers,” he added.

He also expressed opposition to the government’s decision to temporarily allow illegal migrants to work on the land or as domestic helpers. –France24

Salvini was spared standing trial last week by a special committee over allegations of illegally detaining migrants at sea.

Authored by Wolfgang Bauer via BondVigilantes.com,

It’s been a wild ride in May for Italian government bonds, so-called Buoni del Tesoro Poliannuali (BTPs). The yield spread of 10-year BTPs over 10yr German Bunds first rose to c. 250 basis points (bps) after the German Constitutional Court had ruled that the ECB’s Public Sector Purchase Programme (PSPP) was partly unconstitutional. Subsequently, the Italian risk premium collapsed to c. 190 bps when the COVID-19 situation started easing and details around the proposed EU recovery fund were unveiled. European bond investors are scratching their heads about the direction of travel for BTPs, going forward. In my view, we have to take into account three key aspect—the Good, the Bad and the Ugly.

The Good: Next Generation EU

Clearly, the European Commission’s plan to launch ‘Next Generation EU’, a €750 billion EU recovery instrument, is excellent news for the European periphery and especially Italy. The proposal combines joint borrowing at the European Commission level with the provision of grants and loans to the regions and countries most affected by COVID-19. The European Commission went above and beyond what many political observers had previously considered possible by clearly prioritising grants over repayable loans. In fact, two thirds of Next Generation EU funds, i.e., €500 billion, would be distributed in the form of grants. Italy alone would receive more than €80 billion in Next Generation EU grants, more than any other country.

Beyond immediate crisis relief, Next Generation EU could have more far-reaching implications. Many a commentator enthusiastically referred to the Merkel-Macron plan for a grant-focused EU rescue fund, on which Next Generation EU is based, Europe’s seminal ‘Hamilton moment’. If this is the case and the EU really moves towards fiscal integration, we should expect yield dispersion in the Euro area to drop sharply. In this scenario, BTPs are very likely to perform particularly well. With the exception of Greek debt, Italian BTPs are currently trading at a higher risk premium over Bunds than any other Euro area government bonds—more than 90 bps wider than Spanish bonds at the 10-year point, for example—thus offering a greater potential for spread compression.

In my view, there is considerable downside risk to the BTP compression trade, though. So far, Next Generation EU is just a proposal, albeit a bold one, which still requires support from EU member states. It is entirely within the realms of possibility that the plan is watered down, delayed or scaled back in the process. In fact, Austria, the Netherlands, Sweden and Denmark—the so-called ‘frugal four’—have already presented a counter-proposal, based on repayable loans rather than grants. Chancellor Merkel, one of the architects of the proposal, is also facing headwinds at home, not least within her own party. One of the key points of criticism is that allowing the European Commission to borrow €750 billion on behalf of the EU to fund Next Generation EU could be construed as European debt mutualisation through the back door.

The Bad: Italy’s economic outlook and debt burden

Even if Next Generation EU is implemented as planned, it could turn out to be merely a one-off measure rather than a Hamiltonian watershed moment ushering in a new era. If in the end European fiscal integration proves elusive, Italy’s Next Generation EU boost might be short-lived and markets are likely to shift their focus rather swiftly back to the country’s fundamentals, which do not give occasion to overwhelming optimism. Even before COVID-19 struck, economic growth in Italy was anaemic. The economy already contracted in the final quarter of 2019 by 0.2%. The latest quarter-on-quarter GDP print (-5.3% in Q1 2020) is concerning and distinctly weaker than for the Euro area as a whole (-3.8%). According to a recent Bloomberg survey amongst 32 economists, the Italian economy is expected to shrink by 10.3% this year.

And while 2020 is going to be a highly challenging year for most economies, what makes the situation particularly precarious for Italy is the country’s high debt burden. According to Eurostat, Italy’s government debt-to-GDP ratio is close to 135%, which is more than 50 percentage points higher than the Euro area average (84.2%). Taking into account the Italian government’s recently announced €55 billion stimulus package, in combination with the shrinking GDP base, the EU Commission expects Italy’s public debt to jump to nearly 160% of GDP this year, a whopping 100 percentage points above the maximum debt level stipulated in the Maastricht Treaty.

So far, the prospect of Italy’s government debt rising to eye-watering levels has not spooked investors. One of the key factors is clearly the ECB’s ultra-accommodative monetary policy stance. The €750 billion Pandemic Emergency Purchase Programme (PEPP) in particular carries weight. Unlike the PSPP, the PEPP gives the ECB a fair amount of flexibility to tilt purchases of public sector securities away from the capital key of the national central banks. When push comes to shove, the ECB could ramp up BTP purchases, thus providing a backstop and calming markets, at least temporarily. Over the long-term, however, I don’t think central bank support alone is going to be a panacea to Italian indebtedness. Unless a credible path towards pan-European fiscal integration emerges, bond markets are likely to call into question the sustainability of Italy’s debt burden at some point.

And the Ugly: Italian politics

One important risk factor around BTPs, which is currently neither debated much nor priced in, is politics. Granted, the situation seems less fragile now than at the beginning of the year, when Eurosceptic opposition party Lega was above 30% in opinion polls. Since then, Lega support has dropped by around 5 percentage points, while Italy’s government coalition has closed ranks and prime minister Conte’s approval ratings have soared.

Growing support for the current leadership in a moment of crisis isn’t unusual, of course. The question is, how long will it last? Chances are that as soon as the nature of the crisis shifts from public health to economic depression, Lega and other opposition parties will gather steam again. Especially in case pan-European crisis responses falls short of expectations, anti-EU political forces would have plenty of verbal ammunition to pull in votes. A number of regional elections, taking place later this year, will be an important litmus test. Investors only have to look back two years in order to remind themselves how sensitive BTP valuations are to political risk in Italy. In May 2018, BTP yields jumped from 1.75% above 3% in a matter of weeks when a coalition government involving Lega took shape and anti-EU rhetoric was dialled up.

Conclusions

Undoubtedly, BTPs have a lot going for them right now. The Next Generation EU proposal has evidently boosted investor confidence in the European periphery. And many market participants expect that the ECB is going to announce later this week an expansion of PEPP purchase volumes by €500 billion, which would be another tailwind for BTP valuations. Hence, it is entirely possible that BTPs spreads continue to compress, at least in the short run. However, medium to long-term I remain very cautious. Without ever deepening pan-European fiscal integration, which may or may not happen, BTPs are very likely to come under considerable pressure again due to Italy’s economic malaise, its towering debt burden and political fragility. In my view, at a spread of c. 190 bps over Bunds investors might not get adequately compensated for the lingering risks.

As Boris Johnson struggles to rebuild trust with a shellshocked public while also facing down a growing insurrection within his own party, more government bureaucrats are turning on the PM and criticizing the government’s accounting of coronavirus deaths and cases, a persistent hot-button issue in the UK, which has repeatedly revised its numbers to account for deaths at nursing homes, other long-term care facilities, and private homes.

Sir David Norgrove has today replied to @MattHancock, Secretary of State for Health and Social Care regarding the Government’s COVID-19 testing data https://t.co/jOvTnLMSXK pic.twitter.com/jSUjcZoZrV

— UK Statistics Authority (@UKStatsAuth) June 2, 2020

In a letter to Health Secretary Matt Hancock, UK Statistics Authority Chairman Sir David Norgrove warned that the government’s daily coronavirus testing figures are “far from complete and comprehensible.” This, despite the fact that the UK has the second-largest death toll in the world, exceeded only by the US.

But this time, it wasn’t the number of deaths and cases that drew the criticisms, it was the government policy to include results from home-testing kits which have been found to be less-than-reliable in practice.

For whatever reason (probably a self-serving desire to make it seem like they’re running as many tests as possible) HMG has insisted the most accurate way of recording the data is to count the test results on the day the tests were run without distinguishing whether the tests were home tests, lab tests, or whether individual patients required multiple tests to get a reliable result.

Norgrove said the “aim seems to be to show the largest possible number of tests,…[i]t is not surprising that given their inadequacy, data on testing are so widely criticized and often mistrusted,” he said. The government’s daily presentations on the virus give “an artificially low impression” of the percentage of tests that are positive. Making them even less useful for the public, the data are presented in a way that’s difficult to understand. Many of the key numbers make little sense without technical notes that can be difficult to understand.

The criticism has intensified as Johnson has started the process of reopening the British economy, taking the first initial steps to allow more and larger gatherings with friends and family, as he moves toward relaxing the lockdown with great trepidation.

The reasons why the UK’s outbreak was so singularly deadly also still aren’t well understood. Given this, we expect a steady stream of criticism for the government’s methods to continue until somebody can drum up a plausible explanation.

Authoired by Jonathan Turley,

I have written for years on the crackdown on free speech in France, Germany, and England though hate speech laws and speech regulations. As many on this blog know, I am unabashedly against limits on free speech and have opposed most public and private forms of censorship for decades.  This often means that, like everyone in the free speech community, I find myself opposing actions against some of the most obnoxious, juvenile, or hateful people in our society.  That is the case with this story.  Three British teenagers have been arrested for a Snapchat video mocking the death of George Floyd.  It was a deeply offensive and stupid act, but the question remains whether society is criminalizing a wider and wider scope of speech.

The teenagers posted the mocking Snapchat video the horrific death of Floyd, who had a knee pressed on his neck as he begged to breathe. It is a scene that still horrifies most of us. Yet, these three idiots took to Snapchat to make fun of the tragedy.

They have received death threats over the posting and outrage grew as the pictures were shared on social media.

We recently discussed how jokes are increasingly viewed as hate speech on campuses.  We have previously discussed the alarming rollback on free speech rights in the West, particularly in Europe (here and here and here and here and here and here and here ,and here and here and here and here and here and here and here and here and here). We have seen comedians targeted with such court orders under this expanding and worrisome trend. (here and here and here).

This obviously is neither funny nor even comedic satire.  It is horrible.  However, the solution to such bad speech is more speech.  We denounce the students for their lack of empathy or humanity in mocking such a tragedy.  Yet, England has been plunging deeper and deeper into speech controls (here and here and here and here and here and, here and here and here and here and here).

Arresting stupid teenagers for tasteless Shapchat parodies creates a chilling effect for all forms of speech. The question is what crossed the line between from the merely tasteless to the outright criminal. It is a highly subjective standard on what jokes trigger the criminal code.  As I previously discussed, France bars incitement to racial discrimination, hatred, or violence on basis of race, origin, ethic group, religion or national identity. That includes such statements in private communications. In the United Kingdom, you can be arrested for language deemed “threatening, abusive, insulting” or “likely to cause[] harassment, alarm, or distress.”

The impact of these laws was evident in a recent poll of German citizens. Only 18% of Germans feel free to express their opinions in public. 59% of Germans did not even feel free expressing themselves in private among friends. And just 17% felt free to express themselves on the Internet.

That is what a “chilling effect” means.  It silences large numbers of people who fear that they could be the next subject of a criminal charge.  I will repeat again the words of Louis Brandeis in his concurring opinion in Whitney v. California (1927) when he declared “If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the process of education, the remedy to be applied is more speech, not enforced silence.”

McDonald’s has started to reopen 924 drive-through restaurants in the UK and Ireland. The process will take three days, but by the end of the week, about 64% of McDonald’s restaurants will be serving Big Macs to hungry customers.

Each branch will have a slimmed-down menu and limited operating hours, between 11 am-10 pm until further notice. Reduced operating hours means there is no breakfast food. Dining areas of all restaurants will remain closed to the public. 

Limited hours and no breakfast have likely caused a stir among some customers, who will also learn this week that a new spending cap of £25 ($31.30) will be applied on all drive-through orders. 

Limited Menu

The reopenings come after several months of closures following strict lockdown orders enforced by the government to flatten the pandemic curve. COVID-19 devastated the UK with 277,738 confirmed cases, and 39,127 deaths, and 25,062 confirmed cases and 1,650 deaths in Ireland, according to data collected by Johns Hopkins (June 2). 

About 168 McDonald’s drive-thrus opened on Tuesday, along with two dozen locations opened for at-home delivery orders only.

This week we are reopening Drive Thrus and McDelivery restaurants across the UK and Ireland, tap below to find your nearest reopened restaurant.

If your local restaurant isn’t on the list yet, don’t worry we’ll be announcing more tomorrow.

— McDonald’s UK (@McDonaldsUK) June 2, 2020

The Daily Mail reports today’s opening was an absolute madhouse for many locations, which saw a flood of people who wanted to get their hands on Big Macs and McNuggets. Some people waited upwards of two hours to get their hands on a burger — with police managing traffic around several places as lines poured onto the streets.  

After consulting with police, managers at McDonald’s in Newbridge, near Edinburgh, have decided to close the drive thru lane temporarily to traffic amid unprecedented demand today. – Daily Mail

Two drive-thru lanes are packed with cars at Livingston’s McDonald’s, which reopened at 11 am with new social distancing measures in place. – Daily Mail

Over 70 cars are queuing for up to two hours this afternoon to get a McDonalds Drive Thru on the Middlebrook Retail Park in Bolton, Gtr Manchester, with the line snaking around the car park. – Daily Mail

Marshalls direct the queue of cars waiting to get their McDonald’s fix today in Astley Bridge, Bolton. – Daily Mail

Drive-thru lanes were packed in Dunstable as McDonald’s reopened at 11 am on Tuesday, but customers can only order up to £25 worth of food at a time. – Daily Mail 

Peace and calm were widely seen as McDonald’s reopened some European locations, unlike the US, rioters are burning down shops in a fit of rage. 

Authored by Paul Antonopoulos via InfoBrics,

On May 27, the political movement Italia Libera submitted a constitutional bill to the Supreme Court of Cassation demanding a referendum for Italy to leave the EU. After years of discussions, the foundation stone was laid for Italians to debate whether they want to remain in the EU or follow the United Kingdom out of the bloc. The draft bill presented by Italia Libera to the Supreme Court of Cassation is entitled “Call for a referendum on the withdrawal of the state from the European Union.”

Effectively, Italia Libera has demonstrated that it is possible to follow an institutional path to allow citizens to decide whether they want to remain in the EU or not – and for those who want to leave, now is the best time considering the massive decline in popularity for the bloc after their abandonment of Italy when it was at the peak of the coronavirus pandemic. 

Gian Luca Proietti Toppi, a lawyer involved in the bill, said that it is necessary to reach ordinary Italians and “open their eyes to the harmful effects of participating in a Union without a soul and based only on finance. It is clear that with the filing of the 50,000 signatures necessary to start the parliamentary process of the proposal, a broad debate will open on the opportunity to exit the cage of the EU and the Euro.”

He continued to explain that “the effects of liberating the old continent from this bureaucratic and oppressive superstructure will certainly be complex to manage. However, Italia Libera, who is the first promoter of the Committee that collected the signatures needed, has already put experts and academics to work to draw up a plan that will secure the savings of Italians and from the debt.”

Although he did not mention the EU’s abandonment of Italy during the peak of the coronavirus pandemic, he did emphasize how the bloc financially exploits Italy, just as it does to all of Mediterranean Europe with the exception of France.

There are many positive aspects to the EU, most notably the free movement of people and a coordinated effort to fight crime through Europol, but these multilateral agreements can exist without a European Parliament and domineering institutions based in Brussels and Strasbourg. As Toppi explained, Italy imagined the EU to be “a community of peoples and not of bankers.” It is for this reason that they announced the bill on the same day an unprecedented European Union Recovery Fund became official. This fund was only established because of the backlash received due to the bloc’s initial disinterest in assisting already struggling economies of the EU that were being further devastated financially by the pandemic.

With widespread southern European dissatisfaction with how the EU abandoned its supposed liberal ideals, particularly Germany, in favour of serving inward self-interests, bloc leaders are now playing catch up. President of the European Commission and Angela Merkel’s right-hand man in previous German governments, Ursula Von Der Leyen, and the President of the European Central Bank, Christine Lagarde, who was also a former member of the Troika of bankers, announced the unprecedented measures to assist Europe through its financial woes. This time they promised real aid that would not completely decimate state structures and entire economies like what happened to Greece, Spain, Portugal, and to a lesser extent Italy, for the entirety of the 2010’s. The Governor of the Bank of Italy expects a 13% drop in GDP in 2020, and for this reason Toppi emphasized that Italy does not need any further indebtedness which will increasingly put Italy in the hands of international speculators.

However, Italians remember that Lagarde announced on March 13, just as coronavirus was truly beginning to overwhelm hospitals, that the pandemic was an Italian problem only. This was the catalyst that saw ordinary Italians begin to remove EU flags from public display and replace them with Russian and Chinese flags in gratitude to the significant assistance that these two countries gave to Italy when it was abandoned by Brussels and Berlin.

An “Italexit” would be a bigger blow to the prestige of the EU then Brexit. Italy, as a G20 country, uses the Eurodollar unlike Britain which maintained currency sovereignty and continued to use the pound. Therefore, to prevent the strong possibility that Italy in the coming years could leave the EU, Brussels and Berlin must take note of its political failures and work to design a new community that has respect for national sovereignty and identity, and on the basis of reciprocity. It is not acceptable that Germany remains the dominant country of the EU and effectively rules over the European Commission, the European Central Banks, the European Court of Justice and the European Parliament.

A Europe free of unscrupulous bankers, self-referential bureaucrats and inadequate politicians is at the forefront of those pushing for their respective countries to exit the EU or call for its reformation. However, for this to be achieved, a major state must lead the charge, and it appears that Italy will take on this mantle and could very well be the first Eurodollar state to leave the EU if drastic reformations are not made. And Italian exit will surely have a domino effect felt all across Europe.