Internet Censorship in US and Europe Is Coordinated

The EU Is Warning American Tech Giants to Crack Down on Hate Speech Now  …  “They will have to act quickly and make a strong effort in the coming months.” U.S. tech giants including Facebook, Twitter, Google’s YouTube and Microsoft will have to act faster to tackle online hate speech or face laws forcing them to do so, the European Commission said on Sunday. -Reuters

Western governments are censoring speech in Europe and the US, an obvious pattern that clearly shows coordination.

In the US, there is a congressional effort to fund intel agencies that will investigate alternative media for ties to Russian propaganda. Such investigations , if they occur, will  retard this sector and make further, free-reporting difficult.

In Europe, efforts to control speech and reporting are actually being aimed at American communication enterprises such as Google, YouTube and Microsoft (see excerpt above).

More:

The European Union (EU) executive’s warning comes six months after the companies signed up to a voluntary code of conduct to take action in Europe within 24 hours, following rising concerns triggered by the refugee crisis and terror attacks.

This included removing or disabling access to the content if necessary, better cooperation with civil society organizations and the promotion of “counter-narratives” to hate speech.

The code of conduct is largely a continuation of efforts that the companies already take to counter hate speech on their websites, such as developing tools for people to report hateful content and training staff to handle such requests.

Top powers in the US and Europe will not likely admit coordination to crack down on Internet news and views but this is obviously what’s happening.

It is true that European censorship justifications have a longer history. Complaints about terrorism and hate speech have been voiced for several years. In the US, the sudden emergence of concern over Russian influence on ‘Net-based media is a new phenomenon.

Nonetheless, the House has just passed a bill to fund investigations into Russian influence on American media (see here). Such investigations might involve the tracking of so-called Alt.right “hate speech” as well.

Western efforts to “control” the Internet will no doubt adopt certain Chinese solutions over time. In China the Internet is actively being used as an agency of repression. Citizens are to receive ‘Net-based “grades” based on docility and how well they obey laws and generally fit in.

The larger question as governments crack down on ‘Net-based speech is whether or not people’s awareness of what is actually going on in their societies will transcend censorship.

History seems to show that after the Gutenberg Press launched an explosion of new ideas in printed form it took Western governments (and the controllers behind them) many centuries to regain control – 400 or 500 years as a matter of fact.

Western governments face similar problems now. A whole generation of individuals has absorbed a new way of thinking promulgated by the ‘Net. This is one reason approval of mainstream media is in the single digits while up to 50 percent or more (in the US, anyway) admit to belief in “conspiracy theories” – versions of important events not dictated by government and secret forces operating behind government.

In aggregate these views posit a different society than the current one. Today’s society is an outgrowth of World War II reorganization and depends heavily on the dictates of massive governments and even larger corporate enterprises.

‘Net-based alternative sociopolitical organization tends to criticize such titanic social solutions and is often more libertarian based. The idea is that culture ought to dictate social organization and economic, political and even military control ought to be organized from the ground up instead of top down.

These two models are on a collision course. Despite the intention of elites to wipe out the emergence of alternate thinking regarding social control, the insights that have been re-established via Internet communication are not going to easily or rapidly dissipate. In fact, censorship will likely reinforce their validity and emphasize their credibility.

A whole different world view is now part of people’s consciousness, certainly in the West and likely elsewhere too, even China. Such alternative insights about money, power and politics are extraordinarily difficult to eradicate. Ideas of freedom, local authority and individual responsibility are not easily stamped out once they have gained – or regained – credence.

In this case, the Western intelligentsia has been reawakened en masse to an alternative cultural model that has its roots in thousands of years of practice and application. These cultural solutions stand clearly in opposition to the current sociopolitical formula that emphasizes bigness and technocratic authoritarianism.

Anti-war, pro-individual freedom, private money and private justice, these precepts have found their way into intellectual circulation once more. They are extraordinarily compelling and will continue to have an influence far beyond what is easily apparent.

As this article was about to be posted, Zerohedge reported that Naked Capitalism’s Yves Smith has threatened The Washington Post with a defamation suit and demanded a retraction for reporting that the website was in league with Russian interests. We’re actually surprised a class action lawsuit hasn’t been launched as numerous websites have been smeared by these accusations. Could such a lawsuit be aimed at Congress as well? 

Conclusion: History may well repeat in the 21st century, but not necessarily in ways current elites are hoping.

Editor’s Note: The Daily Bell is giving away a silver coin and a silver “white paper” to subscribers. If you enjoy DB’s articles and want to stay up-to-date for free, please subscribe here

More from The Daily Bell: 

Will Rand Paul Fight Fake News With a Filibuster?
Rand Corp. Blasts ‘Truth Decay’ – Wants Facts Determined by Appropriate Leaders 

Elites Plot to Replace Austrian Free-Market Economics?

 

 

via http://ift.tt/2ha60qO TDB

“Fake News” Site Threatens Washington Post With Defamation Suit, Demands Retraction

As the “fake news” narrative grows, and The House quietly passes a bill to “counter Russian propoganda” websites, one alleged ‘fake’ news wesbite – as defined by the farcical PropOrNot organization – has struck back. Naked Capitalism’s Yves Smith has threatened The Washington Post with a defamation suit and demanded a retraction.

As the lawyers like to say, res ipsa loquitur. Please tweet and circulate this letter widely. You will notice that our attorney Jim Moody is a seasoned litigator who has won cases before the Supreme Court. He has considerable experience in First Amendment and defamation actions. Past high profile representations include Westomoreland v. CBS and defending Linda Tripp.

 

I also hope, particularly for those of you who don’t regularly visit Naked Capitalism, that you’ll check out our related pieces that give more color to how the fact the Washington Post was taken for a ride by inept propagandists, particularly our introduction to our spoof PropOrNot.org site, which uses the PropOrNot project as an example of sorely deficient propaganda and shows where it went wrong, or the humor site itself. Be sure not to miss its FAQ.

 

We have another post today that describes how the few things that are verifiable on the PropOrNot site don’t pan out, as in the organization is not simply a group of inept propagandists but also appears to deal solely in fabrications.

 

If the site is flagrantly false with respect to things that can be checked, why pray tell did the Washington Post and its fellow useful idiots in the mainstream media validate and amplify its message? Strong claims demand strong proofs, yet the Post appeared content to give a megaphone to people who make stuff up with abandon. No wonder the members of PropOrNot hide as much as they can about what they are up to; more transparency would expose their work to be a tissue of lies.

We fully endorse Yves Smith’s efforts.

Additionally, we note that the only reason we haven’t followed up with a similar action is because i) the allegations were so laughable, and ii) there is too much other stuff going on.

via http://ift.tt/2gH9CzT Tyler Durden

Bill Ackman is Back: Pershing Square Posts 10% Gain in November

Bill Ackman is a billionaire for a reason. While most of you mere millionaire spartan types struggle to keep up with the Joneses, Montauk Bill is constructing giant buildings and acquiring $100 million apartments as a matter of leisure and ‘fun.’

He takes gigantic positions in soon to be bankrupt biotech companies and shorts the shit out of stocks that soar. But none of that matters, for Bill is blessed by the Gods to continue his quest to collect billions of dollars and to make Pershing Square great again.

Thanks to his positions in FNMA, CP, APD and QSR, Ackman enjoyed a rather effervescent lift in November, climbing by 10% — cutting his losses in half for 2016. About $500m of the gains were propelled by Fannie Mae, all thanks to Trump. Also, his HLF short plunged 19%.

Bear in mind, 6 months ago, Bill was besieged in ruin. His fund was down 25%, following a horrendous 2015 (-20.5%). To be down just 10% for the year is truly evidence of the genius of Bill, a man who needs no introduction or assistance as it pertains to the art of professional money management.

Congrats to Bill for making it back and double congrats for clients of Pershing for only losing 10% this year and just -30% over the past two.

 

Content originally generated at iBankCoin.com

via http://ift.tt/2h65ne0 The_Real_Fly

Draghi ‘Put’ Steadies Stocks As Italian Banking System Collapses

The Draghi put is still alive – or at least that’s what the market seems to think, judging by the response to the Italian vote outcome.

The Plunge Protection Team was very evident at the European open…

 

But as Bloomberg notes, while a rejection of Renzi’s reform proposals was expected, political instability and uncertainty over the fate of the country’s troubled banks aren’t fully priced in, and bank stocks are tumbling (after a panic bid at the open)…

 

And as the vicious circle between the sovereign and the banking system escalates, so Italian default risk is at 3 yeear highs…

 

But for now, the market seems to be relieved that the ECB will have yet another reason to extend QE when it meets later this week… which means Buy Euros?

via http://ift.tt/2gH3Xtj Tyler Durden

Donald Trump Picks Ben Carson for HUD, Army Corps of Engineers Nixes Dakota Access Pipeline Route, 30+ Dead in Oakland Warehouse Fire: A.M. Links

  • President-elect Donald Trump is targeting manufacturers looking to move abroad, warning it would be an “expensive mistake.” Trump became the first U.S. president-elect or president in decades to talk to the president of Taiwan over the phone. The transition team announced Ben Carson would be nominated for secretary of housing. The search for a secretary of state, meanwhile, is extending into the private sector, with Exxon-Mobil’s Rex Tillerson reportedly in the running.
  • The Army Corps of Engineers decided it will not grant an easement for the Dakota Access Pipeline to cross under Lake Oahe in North Dakota.
  • More than 30 people died at a party held in a warehouse in Oakland after a fire, which is now being criminally investigated, broke out.
  • Police in Washington, D.C. arrested a man who allegedly walked into Comet Ping Pong, the restaurant at the center of the pizzagate conspiracy theory, with a gun and fired at least one shot.
  • A gunman in Finland killed two journalists and a councilwoman.
  • Alexander Van der Bellen won the presidential election in Austria. The prime minister of Italy resigned after voters rejected a referendum on constitutional reforms.
  • The prime minister of New Zealand unexpectedly resigned after eight years in office, saying it was the “right time.”

Follow us on Facebook and Twitter, and don’t forget to sign up for Reason’s daily updates for more content.

from Hit & Run http://ift.tt/2gYF7pi
via IFTTT

Key Events In The Coming Weeks: Italy Aftermath, ECB, ISM, Consumer Confidence

The key economic releases this week are ISM non-manufacturing on Monday and University of Michigan consumer sentiment index on Friday. There are a few scheduled speaking engagements from Fed officials this week.

Away from the US economic calendar, initially focus will be on the Italian referendum result, which already appears to have been largely digested by the market, despite a variety of unknown consequences still to emerge. It will then shift quickly to a critical ECB meeting.

As BofA notes, Mario Draghi’s interview in El Pais on the last day before the ECB starts its pre-meeting “quiet period” sets the landscape quite clearly. The decisions will come next week (in direct contrast with those who advocated waiting until January), tapering “proper” (i.e., winding down the programme) is not on the table, and the discussion on QE ultimately boils down to either continuing with the current pace of buying of EUR80bn for a relatively short period of time, or reducing the pace but buying for a longer period of time. Draghi did not hint at any personal preference there. It seems that both options would be consistent with “preserving the very substantial degree of monetary accommodation” that is needed.

BofA, as well as Goldman and many other banks, expect Draghi to continue monetizing debt at a pace of €80bn per month until Sept. 2017 at the earliest, with flexibility on the capital key and moving the issue limit on non-CAC bonds.

Back to key economic events, the breakdown is as follows:

  • In the US we have ISM survey, trade balance, durable goods, wholesale inventories and U.Michigan index. Fed speakers currently on schedule are concentrated on Monday.
  • In the Eurozone, beyond the Italian referendum result and the ECB important releases include Eurozone PMIs (Final), October retail sales and 3Q GDP (Final).
  • In the UK, the main releases are PMIs, industrial production, trade balance and housing.
  • We also highlight the court hearings concerning government’s appeal against A50 ruling.
  • In Australia, the focus is on the RBA meeting as well as on the economic releases including trade balance, GDP and foreign reserves.
  • In Japan, we await releases on PMIs, GDP, trade balance and money supply.
  • In China, the main releases are trade balance and inflation.

* * *

A quick look at the global week ahead on a daily basis:

  • This morning in Europe we’re kicking off the week with the remainder of the November PMI’s which includes the final services and composite revisions for the Euro area, Germany and France, as well as a first look at the data for the UK and non-core. Euro area retail sales data for the month of October is also out today. In the US we’ll get the remaining PMI’s as well as the ISM non-manufacturing print for November and labour market conditions index.
  • Tuesday kicks off in Germany with the latest factory orders data before we then get the final Q3 GDP reading for the Euro area. In the US tomorrow we’ll get the October trade balance reading, Q3 unit labour costs and nonfarm productivity, October factory orders, December IBD/TIPP economic optimism reading and the final durable and capital goods orders revisions.
  • Germany gets things going again on Wednesday when we’ll get the latest industrial production report. French trade data and UK industrial and manufacturing production will also be released. The only data due out in the US on Wednesday is JOLTS job openings and consumer credit for October. China will also release November foreign reserves data at some stage.
  • The early data to get things going on Thursday comes from Japan where the final Q3 GDP reading will be released. China will then be following with important November trade data. There’s no data in Europe on Thursday but all eyes will be on the main event of the week, the ECB policy meeting outcome just after midday. The only data out of the US on Thursday will be initial jobless claims.
  • We close out the week in Asia on Friday with the November CPI and PPI prints in China. In Europe we’ll get trade data in Germany, industrial production data in France and trade data in the UK. Over in the US we’ll get the final October wholesale inventories report along with a first look at the University of Michigan consumer sentiment report. Away from the data the Fedspeak this week all comes today with Dudley, Evans and Bullard scheduled.

* * *

Finally, here is a full summary of key US events, together with consensus and estimates from Goldman Sachs

Monday, December 5

  • 08:30 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give a speech on the economic outlook at the Association for a Better New York.
  • 09:11 AM Chicago Fed President Evans (FOMC non-voter) speaks: Chicago Fed President Charles Evans will give a speech at the Executives’ Club of Chicago’s CEO Breakfast. Audience and media Q&A is expected.
  • 09:45 AM Markit Flash US Services PMI, November final (consensus 54.7, last 54.7)
  • 10:00 AM Labor market conditions index, November (consensus -0.2, last +0.7)
  • 10:00 AM ISM non-manufacturing, November (GS 55.0, consensus 55.5, last 54.8): We expect the ISM non-manufacturing index to edge up to 55.0 in the November report, up from 54.8. While non-manufacturing surveys were mixed at the headline level, underlying details from the reports suggest that business activity improved modestly on net in November. The Dallas Fed (+9.6pt to +12.6) and the New York Fed (+6.4pt to -6.8, not seasonally adjusted) service sector surveys both strengthened, while the Philly Fed (-10.7pt to +10.6) and Richmond Fed (-4pt to +3) surveys softened. The Markit Services PMI also ticked down in November. Our non-manufacturing tracker stands at 53.3 for November, from 52.9 in October.
  • 02:05 PM St. Louis Fed President Bullard (FOMC voter) speaks: St. Louis Fed President Bullard will give a speech on the U.S. economy and monetary policy at the W.P. Carey School of Business’ Economic Forecast luncheon at Arizona State University. Media Q&A is expected.

Tuesday, December 6

  • 08:30 AM Trade balance, October (GS -$41.1bn, consensus -$42.0bn, last -$36.4bn): We expect the trade balance to widen in October to -$41.1bn. The Census Bureau’s new Advance Economic Indicators report showed a larger than anticipated trade deficit in October.
  • 08:30 AM Nonfarm productivity, Q3 final (GS +3.4%, consensus +3.3%, last +3.1%): Unit labor costs (qoq), Q3 final (GS +0.8%, consensus +0.3%, last +0.3%): We expect Q3 nonfarm productivity to be revised up to +3.4% (qoq ar) from 3.1%, primarily reflecting upward revisions to output. Unit labor costs are likely to be revised up to 0.8%.
  • 10:00 AM Factory orders, October (GS +2.9%, consensus +2.5%, last +0.3%): Factory orders likely moved up in October, following last week’s durable goods report which showed new durable goods orders were firmer than expected.
  • 10:00 AM Durable goods orders, October final (consensus +4.8%, last +4.8%); Durable goods orders ex-transportation, October final (last +1.0%); Core capital goods orders, October final (last +0.4%); Core capital goods shipments, October final (last +0.2%)

Wednesday, December 7

  • 10:00 AM JOLTS job openings, October (consensus 5,445, last 5,486): Consensus expects job openings to edge down in October following a slight gain in the September report. The layoff and discharge rate moved down to an all-time low for the series.
  • 03:00 PM Consumer credit, October (consensus $18.5bn, last $19.3bn)

Thursday, December 8

  • 08:30 AM Initial jobless claims, week ended December 3 (GS 260k, consensus 255k, last 268k): Continuing jobless claims, week ended November 26 (consensus 2,048k, last 2,081k): We expect initial jobless claims to decrease to 260k from 268k last week. Last week, initial claims rose more than expected, most likely due to temporary volatility resulting from the Thanksgiving holiday during the reference week.

Friday, December 9

  • 10:00 AM Wholesale inventories, October final (consensus -0.4%, last -0.4%)
  • 10:00 AM University of Michigan consumer sentiment, December preliminary (GS 94.5, consensus 94.4, last 93.8): We expect the University of Michigan consumer sentiment index to increase further to 94.5 in the December preliminary estimate, following an improvement in the November report. The Conference Board’s consumer confidence index jumped to a new cyclical high in the December report.

Source: BofA, Goldman, DB

via http://ift.tt/2gtdVvw Tyler Durden

“Investors Are Dangerously Unprepared” – Axel Weber, Former Bundesbank Head Warns Of Coming Rate Hikes By ECB

Submitted by Michael Shedlock via MishTalk.com,

Axel Weber, former head of Germany’s central bank says the ECB is going to halt QE soon and hike rates by September.

Weber warns Markets Unprepared for Central Bank Shifts.

weber

Investors are dangerously unprepared for a sharp rise in eurozone bond yields when US interest rates march higher and European quantitative easing ends, Axel Weber, chairman of UBS and the former head of the Bundesbank, has warned.

The jump in US rates could spark big jolts in the markets as the long spell of aggressive monetary easing across the globe has left many investors off-guard over a swing in the global rate cycle, he added.

 

“I don’t think we will have increasing divergence among the major central banks in the world for much longer,” Mr Weber said, predicting that Europe would follow the US with a rate rise by next September at the latest. “I think the ECB is closer to slowing its current quantitative easing programme than many in the market expect.”

 

Until now, the eurozone has not seen a similar swing in rates as short-term rates have stayed low — or even negative in some markets — while the ECB has been engaged in aggressive QE, including extensive bond purchases.

 

But Mr Weber predicted that the ECB would end its bond purchases sooner than many investors had assumed, sending the eurozone yield curve higher. “A large part of the market is uni-directionally positioned and it is positioned in a direction where you will have to take off some of those positions over the course of 2017,” he said.

 

Mr Weber also voiced support for Mr Trump’s plans to move away from only monetary stimulus toward more structural measures and fiscal stimulus, such as large-scale infrastructure projects. He aired concern that US companies with international operations could be negatively affected by the president-elect’s plans to alter trade agreements.

 

“Markets know how to price and discount market risk,” he said. “Markets are much less good at pricing political uncertainty . . . Our broad presence in continental Europe gives us optionality in case we need to move employees from London to onshore locations. Optionality is going to be the name of the game.”

Shocked?

I will not be shocked if the ECB tapers QE. It isn’t doing Europe a bit of good.

As for hikes, I doubt it, unless the ECB is forced to hike in response to a euro plunging out of control, possibly in response to Italy leaving the eurozone. It seems a bit early for that scenario, but Italy is likely to exit the Eurozone in due time causing all sorts of havoc.

Everyone seems to have bought into the idea that a big round of inflation is coming shortly. I think a deflationary asset-bubble bust is more likely, with central banks having to reverse hikes (assuming they get hikes in the first place).

via http://ift.tt/2h9YNYa Tyler Durden

What Happens Next In Italy: Here Is Goldman’s Take

While the market overcame its initial scare following yesterday’s counter-establishment Italian referendum vote, and European stocks proceeded to not only make up all losses, but soar in the overnight session by the most since Trump’s presidential victory, what happens next in Italy is largely unknown. What follows are Goldman’s snap thoughts on the Italian next steps.

First, a quick recap of what has happened in yesterday’s referendum in which many more Italians than expected turned up to reject the proposed reforms, leading PM Renzi to announce his resignation later today. The odds of a general election have risen from one-in-five to one-in four, according to Goldman. Despite yesterday’s outcome, Renzi remains the most popular politician on the centre-left. More importantly, the outcome of the vote lowers the chances of a market-driven solution for the ailing Italian banks, and in turn increases the likelihood of a State-led restructuring Goldman notes.

Here are the details:

In a national confirmative referendum held yesterday, Italian voters rejected a Constitutional reform bill sponsored by the coalition government of Mr Renzi and passed by Parliament in April. The referendum was called because the bill had failed to receive the quorum of 2/3 of MPs in its final reading.

The outcome of the referendum was in line with opinion polls in the run-up to the vote. These had been suggesting that the ‘Vote No’ side would win by some distance. Two elements are new, however (all numbers based on quasi-final vote count):

  • At 59.1%, the percentage of voters rejecting the reform bill was 5 percentage points higher than projected by opinion polls going into the referendum (55%). This outcome represents a much starker victory for the ‘Vote No’ camp than generally envisaged. Goldman assumed that the odds favoured a ‘Vote No’ win only marginally (55%), and that the gap between the two sides would be small, within 10 percentage points rather than the realised 20.
  • The voter turnout was 10 percentage points higher than projected by pollsters (65.5% vs. 55%), with close to 33 million people casting their vote (19.4 million voted ‘No’ and 13.4 million ‘Yes’). By comparison, the turnout in the UK Brexit vote was 72.2% (corresponding to 33.6 million people) while in the Italian 2006 referendum on Constitutional reforms, which also saw the amendments being rejected, the turnout was 52.3%.

A first analysis of the vote breakdown suggests that the electorate largely acted on political priors. Specifically:

  • In polling districts where opposition right-wing parties and the 5 Star Movement gathered higher consensus back in 2013 (Southern Italy, alongside some areas in the North), the ‘Vote No’ camp has achieved its best results, reaching as much as 70% of the vote share.
  • In the South, the ‘No’ vote outnumbered the ‘Yes’ by a remarkably ample margin (more than 40%) in Sicily and Sardinia, where the 5 Star Movement managed to outperform the Democratic Party in the 2013 general election.
  • The constitutional reform has been largely rejected also in the North-East of the country, a stronghold of the Euro-sceptical Northern League. The ‘Vote No’ camp, for instance, obtained 62% of the vote in Veneto, where Lega won roughly one-third of opposition votes in the 2013 general election.
  • Conversely, the regions where the Democratic Party performed better at the 2013 elections – such as Emilia Romagna and Tuscany, where it won more than 40% of votes – were those experiencing a victory of the ‘Vote Yes’ camp.
  • The relationship between the share of youth unemployment by polling region and No share of the vote is strikingly positive (see Exhibit 2). This is a result that will carry a large weight in the next general elections, as well as those in other European countries. The general impression here is that the youth and the disadvantaged are rebelling against the establishment, even when its policies bring economic benefits, albeit unequally distributed (incidentally, the protests against the ECB policies of low rates and QE go in the same direction).

Exhibit 1: The percentage of voters rejecting the reform bill was 5% higher than projected by opinion polls
Monthly average of opinion polls weighted by survey sample size, and final results

Exhibit 2: The reform has been more largely rejected in disadvantaged regions
Regional Youth (18-29) Unemployment Rate in 2015 and ‘Vote No’ Percentage By Region

What Happens Next

The rejection of the Constitutional amendments does not represent an institutional trauma. Indeed, the architecture of the Italian State will remain as it has been since 1948. What are more relevant for market participants are the political scenarios that open up from here. Indeed, the vote was seen as a test of the popular support still enjoyed by the moderate, reformist and pro-European government of Mr Renzi and the larger-than-expected defeat will not be without consequences. Goldman’s base case remains that a transition government will be in seat until a general election in early 2018.

This is how Goldman see the political situation evolving:

  • This afternoon, PM Renzi will formally tender his resignations to the President of the Republic, Mr Mattarella. The latter will likely ask Mr Renzi to stay on to preside over the approval of the 2017 Budget Law – the deadline is 31 December. Meanwhile, the President will officially start consultations with leaders of all political forces represented in Parliament to explore the formation of a new government.
  • Mr Renzi’s Democratic Party (PD) enjoys a relative majority in Parliament. Together with its centrist allies, it holds an absolute majority in both Houses (393 seats out of 630 in the Lower House and 186 out of 320 in the Senate). Since the ‘old guard’ of PD’s leadership did not support the constitutional reforms, the political fallout is likely to be mostly within the party, rather than altering broader political balances. Goldman’s base case is that the current ruling coalition will stick together and back a new government.
  • Relative to Goldman’s prior expectations, the bank would elevate its subjective probability from 45% to 60% of a caretaker government being appointed. GS expects the Cabinet to be led by a political figure drawn from the ranks of the ruling coalition (one possibility is the Minister of the Economy, Mr Padoan). An outsider technocrat is unlikely to be appointed as this would be highly unpopular choice with the electorate. The new government would likely have a narrow policy agenda consisting mainly of: (i) Overseeing the recapitalisation of the partly state-owned Monte dei Paschi di Siena and potentially other smaller banks. If the referendum outcome stalls the current recap plans, a precautionary injection of public funds into these institutions could be required. In such a case, the application of the ‘bail-in’ rule book would be contentious, and the market instability exemption could be invoked; and (ii) re-drafting the electoral laws for the two Chambers of Parliament ahead of a general election in the spring of 2018.
  • As expected, the opposition 5 Star Movement and Lega Nord are calling for the dissolution of Parliament and early general elections. Goldman has raised its subjective odds of elections in 2017 from 20% to 25%, but not higher. The Constitutional Court is expected to rule on whether the electoral law for the Lower House (nick-named Italicum in the Italian media) is fit for purpose. The central case is that the Court will ask Parliament to redraft the law to enhance social representation. The same fate already occurred to the electoral law for the Senate and voting with the current set of electoral rules would most likely result in a ‘hung’ Parliament. A redrafting of the electoral laws would also serve the purpose of reducing the risk that anti-establishment forces take control of Parliament. Arguing for an increase in the odds of an early election is the fact that Mr Renzi, whilst defeated, was able to get around 13 million voters behind him, around 30% higher than in the European parliament elections of 2013, and he remains the most popular politician on the centre-left of the political spectrum.

Exhibit 3: Updated probability scenarios after the vote

 

What Are the Market Implications

In relation to markets, Goldman thinks that some pressure on Italian BTP spreads to their core counterpart will be seen over coming days, especially following the tightening seen in the latter part of last week (the 10-year spread to Germany closed at around 160bp last Friday and is currently trading just under 170bp).

That said, with the Bank of Italy active in the secondary market and the ECB expected to announce an extension of QE on Thursday (Goldman’s forecast is EUR 80bn pace through most of 2017), the bank doubts that the widening can take the 10-year differential with Germany much above the highs of 190-200bp even on turbulent days.

Most of the focus will be on banks. Today, official news on the (conditional) subordinated debt-to-equity conversion of Monte dei Paschi is expected and discussions with ‘anchor investors’ will follow. Goldman views the likelihood of successful market-driven recapitalisations of the weaker Italian retail banks as relatively low. The outcome of the vote increases the chance of a State-led restructuring. In such cases, the application of ‘bail-in’ rules under the BBRD remains a key point of contention. The government could invoke an exemption from burden sharing on the grounds that financial stability could be endangered. Goldman would separate the fate of Monte dei Paschi (and that of smaller ailing lenders) from sovereign risk more broadly, and is of the view that a resolution of the banking capital shortfalls, even if it involves public funds, would ultimately be positive for the sovereign risk outlook.

Exhibit 4: Around 40-50bp of BTPs current yields are driven by Italian idiosyncratic factors
Italy 10-year yields idiosyncratic factor estimate based on G4-PCA

Exhibit 5: Italian banks have underperformed their European peers
Italian banks and European banks indexes (set to 100 in Jan 2016) and 10-Year Bunds

via http://ift.tt/2gXXSXA Tyler Durden

Potential “Systemic Crisis In Eurozone” After Italy Votes No, Renzi Resigns

Italy Votes No, Renzi Resigns – Potential “Systemic Crisis In Eurozone”

Italy’s Prime Minister Matteo Renzi has said he will officially resign Monday, after voters apparently rejected his proposals for constitutional reform. What should investors keep an eye out for after his defeat?

Although the referendum on Sunday was officially on Renzi’s plan for legislative overhaul, it was widely seen in Italy as a vote of confidence in the prime minister and his government. In voting “no” — projections suggest 59% of those in the ballot made that choice — the Italians have set the stage for an early election and perhaps given local populist parties the chance to deliver a Brexit- or Trump-style shake-up.

But if the political uncertainty lasts, the fallout from the vote could have an effect not only within Italy — on its already embattled banks, for instance — but also beyond the borders of the boot-shaped country.

The problems in Italy could — in theory — “spark a systemic crisis in the eurozone,” said Holger Schmieding, chief economist at Berenberg, in a recent note.

A “protracted period of political uncertainty after a ‘no’ vote could exacerbate the Italian banking issues, unsettle the Italian bond market and weigh on business and consumer confidence,” he said.

Over recent weeks, the spread between Italian and German 10-year government-bond yields has reached a two-year high, according to Dow Jones Newswires. That has been interpreted by some as a sign that the eurozone is at risk of a breakaway.

Even though markets have been anticipating a “no” vote in Italy, Italian sovereigns bond yields may continue to surge as investors will ask higher return for their risk…”

Real full article from Marketwatch here

 

Gold and Silver Bullion – News and Commentary

Euro Slips With Asian Stocks While Bonds Rise as Italy Votes No (Bloomberg.com)

Gold prices nudge up after Italian PM resigns (Reuters.com)

Gold Prices Ease, Surrender Gains On Dollar Strength (NDTV.com)

Euro Reaches 20-Month Low as Renzi Concedes Referendum Defeat (Bloomberg.com)

Renzi Quits as Italy Referendum Defeat Deepens Europe’s Turmoil (Bloomberg.com)

What to know now that Italy has voted ‘no,’ with Renzi set to step down (MarketWatch.com)

Trump Takes On China in Tweets on Currency, yuan drops amid concern China to be named manipulator (Bloomberg.com)

We Have Killed Capitalism – Jim Sinclair (USAWatchDog.com)

Donald Trump’s unhappy fate is to oversee a financial crisis far worse than the last (CityAM.com)

Platinum supply under extreme pressure – Dunne (MiningWeekly.com)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

05 Dec: USD 1,164.90, GBP 915.84 & EUR 1,095.36 per ounce
02 Dec: USD 1,171.65, GBP 929.00 & EUR 1,100.88 per ounce
01 Dec: USD 1,168.75, GBP 930.09 & EUR 1,099.68 per ounce
30 Nov: USD 1,187.40, GBP 952.06 & EUR 1,115.44 per ounce
29 Nov: USD 1,187.30, GBP 952.45 & EUR 1,119.98 per ounce
28 Nov: USD 1,189.10, GBP 956.51 & EUR 1,117.99 per ounce
25 Nov: USD 1,187.50, GBP 953.30 & EUR 1,121.83 per ounce

Silver Prices (LBMA)

05 Dec: USD 16.62, GBP 13.05 & EUR 15.54 per ounce
02 Dec: USD 16.35, GBP 12.95 & EUR 15.36 per ounce
01 Dec: USD 16.30, GBP 12.91 & EUR 15.35 per ounce
30 Nov: USD 16.67, GBP 13.39 & EUR 15.66 per ounce
29 Nov: USD 16.54, GBP 13.26 & EUR 15.61 per ounce
28 Nov: USD 16.68, GBP 13.45 & EUR 15.73 per ounce
25 Nov: USD 16.47, GBP 13.21 & EUR 15.55 per ounce


Recent Market Updates

– Gold and Silver Will Protect From Coming Financial Crash – Rickards
– RBS Fail Bank of England Stress Test
– Peak Silver – Supply Deficits Mean Higher Prices
– Bail In Risk – €4 Trillion Banking System In Italy Poses Contagion Risk as Referendum Looms
– Gold Down 13.5% In 13 Days – Trump Bearish For Gold?
– War On Cash Just Got Real – India and Citibank In Australia
– Russia Gold Buying In October Is Biggest Monthly Allocation Since 1998
– Stocks, Bonds, Pension Funds “Will Be Wiped Out…” – Rickards
– Physical Gold Is A “Long-Term Position” as “Hedge Against Governments”
– Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”
– Islamic Gold – Vital New Dynamic In Physical Gold Market
– Peak Gold Globally – “Bullish For Gold”
– Gold Price Should Go Higher On Global Risks and Trump – Capital Economics

via http://ift.tt/2gtd4uL GoldCore

Russian Su-33 Fighter Jet Crashes While Landing On Kuznetsov Aircraft Carrier Off Syria

Three weeks after a Russian fighter jet crashed in the Mediterranean Sea shortly after launching from its aircraft carrier near the coast of Syria, overnight a fighter jet based on the Russian aircraft carrier Admiral Kuznetsov skid off the deck during landing and became lost at sea after an arrestor gear line snapped and failed to stop the aircraft, the Russian Defense Ministry reported.

Su-33 fighter on the deck of Admiral Kuznetsov aircraft carrier

According to RT, the pilot ejected from the plane and was rescued unharmed, the statement said. “Naval aviation sorties are continuing in accordance with their tasks,” the ministry added.

The Aviationist adds that the combat plane crashed at its second attempt to land on the aircraft carrier in good weather conditions (visibility +10 kilometers, Sea State 4, wind at 12 knots): it seems that it missed the wires and failed to go around falling short of the bow of the warship.

This is the second loss for the air wing embarked on Admiral Kuznetsov
in less than three weeks and a significant blow for the Russian Naval
Aviation during its combat deployment off Syria. As reported previously, a Mig-29 fighter jet was not able to land and ran out of fuel because the deck crew of the carrier failed to fix a broken arrestor gear.

The deployment of the Admiral Kuznetsov to Syria is its first combat mission since the ship was built. It is the only aircraft carrier currently in service in the Russian Navy.

via http://ift.tt/2fZHZ5L Tyler Durden