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The Jabhat Fatah al-Sham organization (formerly the al-Nusra Front) claimed to be responsible for Monday’s murder of Russian Ambassador Andrey Karlov’s in Ankara. The terrorist group claimed responsibility via a letter which appeared on the Internet. The letter was written in Arabic.

In its statement, the group said “one of the heroes of the Jaish al-Fatah, Mert Alt?ntas carried out the execution of Russian Ambassador Andrey Karlov in Ankara,” because the world remains silent to what is taking place in Aleppo, no support comes to the Muslims in the Levant and for the victory of the Syrian people.

The 22-year-old policeman Mevlüt Mert Alt?ntas shot Karlov to death while the ambassador was giving a speech at an art gallery. Turkish media reports said Alt?ntas entered the art gallery without undergoing a security check as he showed his police ID.

Jaish al-Fatah wrote the name of Karlov’s killer in big letters as “Martry Mert Alt?ntas.”

Signaling similar attacks in the future, the group also said the assassination of the Russian ambassador was the “first act of revenge” for the women, children and the elderly killed in Aleppo as well as all the Muslims killed across the world.

Immediately after the ambassador’s killing, Turkish government officials and the pro-government media circles pointed to the faith-based Gulen movement as the mastermind of the attack.

Earlier in the day, Turkish media reported that the number of people detained in the investigation over the assassination of Russian Ambassador to Turkey Andrey Karlov has grown to 13. The arrests were carried out in the province of Ankara, in addition to the southwestern provinces of Izmir and Aydin, the NTV broadcaster cited police as saying.

Meanwhile, as reported yesterday, after the ambassador’s killing, Turkish government officials and the pro-government media circles pointed to the faith-based Gulen movement as the mastermind of the attack. Pro-government media outlets ran stories suggesting that Alt?nta? went to a Gulen-linked university preparation course and some of his relatives worked at Gülen-linked organizations. Erdogan has been waging an all-out war against the movement since the outbreak of a corruption scandal in late 2013. The government’s crackdown on the movement reached new heights with a failed coup attempt on July 15 as the government held the movement responsible for the coup attempt. The movement strongly denies having any role in the failed coup.

Turkish Foreign Minister Mevlut Cavusoglu even told his US counterpart John Kerry in a phone conversation on late Dec. 19 that both Turkey and Russia “know” that the Gulen movement is behind the ambassador’s murder. However, in a statement early on Wednesday, the Kremlin said it was too early to conclude who was behind the murder of Russian ambassador Ankara.

In the meantime, one of the advisers of the Turkish-Islamic scholar Fethullah Gulen denied allegations by an unnamed senior Turkish security official of “very strong signs” that the gunman who killed the ambassador belonged to Gulen’s movement. Allegations by an unnamed senior Turkish security official are “laughable” and intended to cover up lax security, the adviser, Alp Aslandogan, told Reuters on Monday. In another statement on Monday, Gulen condemned the assassination of Russia’s ambassador to Turkey as a “heinous act of terror” and urged the Turkish government to identify anyone who aided the gunman.

In other news, Tukish Hurriyet reports that the allegedly redicalized assassin Mevlut Mert Altintas, was part of law enforcement forces that provided security at least eight events attended by the Turkish President Recep Tayyip Erdogan since July 15. The newspaper also points out that just prior to the coup attempt on July 15, Altintas called in sick, and it remains unclear exactly what he was doing during that time when the conspirators were attempting to overthrow President Erdogan.

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The overnight rally in crude following API's unexpectedly large crude inventory drawdown has been erased as more headlines from Libya send WTI lower.

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Total chaos reigns in European banking stocks this morning as Monte Paschi shares crash, soar, and plunge amid on-again, off-again bail-in, bail-out headlines (and stocks and bonds hit record lows). However, Italy is now not alone as Spanish banks are also bloodbathing following a European Court ruling on mortgage fraud went against them.

As MishTalk.com's Michael Shedlock explains, bondholder bail-ins are on the way in Italy as private investors pulled the plug on a bank rescue. Rome plans a €20 billion bank bailout, but under eurozone rules junior bondholders have to take a hit.

Please consider Italy braces for Monte dei Paschi Rescue.

On Monday night, Italy’s finance minister Pier Carlo Padoan confirmed Italy is readying a €20bn rescue fund for MPS and other weak lenders as the chances of a successful €5bn private recapitalisation of the Siena-based bank recede.

 

By the evening of Thursday at the latest, it should be clear whether MPS, which was founded in 1472, will have been rescued by the private sector via a €4.5bn debt-for-equity swap and funds from anchor investors including the Qatar Investment Authority. As of Monday only €200m had been committed to the swap, suggesting the chances of pulling off the rescue are slim, said people close to the deal.

 

MPS’s debt-for-equity swap will close at 2pm Italian time on Wednesday. If it goes badly MPS could already ask the government to step in, said one Italian official.

 

According to an Italian official only about €2bn of the €20bn will be used for liquidity guarantees, and the rest for recapitalisations and for compensating some retail bondholders. Other banks will be rescued on a case-by-case basis over the coming months now that Italy has its “bazooka”. The €20bn rescue fund will abide by EU rules on so-called burden-sharing, which force losses on junior bondholders.

 

Italy’s banks currently have one of the highest problem loan ratios in Europe at 16.4 per cent of total loans, more than three times the European average of 5.4 per cent, according to Moody’s Investors Services and data from the European Banking Authority.

 

Nicolas Véron, an economist and senior fellow at Brussels think-tank Bruegel, argues that “assuming reasonable competent handling, the entire Italian bank system may reach an adequate level capitalisation to allow it to start working out its bad loans by the summer of 2017”.

 

Adding to confidence, UniCredit, Italy’s only globally significant bank, is expected be able to raise €13bn in new capital on the private market next year, say investors.

 

Bankers say reforming a fragmented system, of more than 500 banks, with weak profitability requires deep cuts of between 50,000 and 150,000 jobs by some estimates.

Bail-ins Coming, Expect More

Italian officials and bankers argue a capital injection of €20 billion will be sufficient to stem concerns about Italy’s banks by allowing adequate provisions for bad loans weighing on its economic recovery.

Mish Take

I scoff at the notion €20 billion will come close to curing the problem. Italy’s banks have a combined €360 billion of nonperforming loans that they admit to.

 

It takes quite a stretch of the imagination to presume €20 billion “bazooka” will plug a €360 billion hole. To do so would require an unbelievable recovery rate on those nonperforming loans.

 

€20 billion will not be enough. Heck, €120 billion is probably not enough. And on top of it all, between 50,000 and 150,000 job cuts are coming.

 

Has anyone asked “How those 50,000 to 150,000 will pay their bills?”

For now the pain remains in BMPS with Unicredit and Sanpaolo 'stable'…

 

And BMPS bonds have collapsed to record lows…

 

But it's not just Italy, Bloomberg reports that Spanish banking stocks fall after the European Court of Justice ruled that the May 2013 cut-off point for unfair home mortgage payment reimbursements is illegal.

Borrowers who paid too much interest on home loans pre-dating a May 2013 Spanish ruling on so-called mortgage floors are entitled to a refund from their banks, judges at the EU Court of Justice ruled in Luxembourg Wednesday.

 

The court said that a proposed time limit on the refunds is illegal and customers shouldn’t be bound by such unfair terms. Banco Sabadell SA fell as much as 7.5 percent, while Banco Popular slipped as much as 10.5 percent, the largest decliner in Spain’s Ibex 35 benchmark.

 

"This comes as a surprise and in a bad moment for Spanish banks as most of them would have to make extra provisions to pay for this,” Daragh Quinn, an analyst at Keefe Bruyette & Woods, said by phone. "It will mean pressure on capital generation and profits in the fourth quarter."

 

The EU court case comes as Spanish banks are under pressure from low interest rates and weak demand for credit, affecting their traditional business of lending. With 521 billion euros, home loans are one of the largest parts of Spanish bank lending business as they grew their real estate exposure during a construction boom in the country that burst at the end of the last decade. Some banks are still making provisions for bad loans, which also adds pressure to profit.

Banco Popular Espanol shares fall 7%, Caixabank 3.2% and Banco de Sabadell 3.4%. Santander falls 1.25% and Bankinter by just 0.1%.

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Submitted by Vijeta Uniyal via The Gatestone Institute,

• Islamic State took responsibility for the December 19 Berlin truck-ramming attack that killed 12 people, similar to the July 14 attack in the French city of Nice, and countless car-rammings in Israel. Now Europeans feel what Israelis live with every day.
• This month, the police union in the German state of Thuringia issued an open letter to the state's Interior Minister, describing the crumbling law-and-order situation amid the rising migrant crime: "[You] are abandoning us completely helpless to a superior force… But what changes? Nothing. One instead gets a sense of uninterest."
• Meanwhile, representatives of Arab community were reported telling the police in Ruhr, "The police will not win a war with us because we are too many."
• Chancellor Merkel, Germany's ruling elites and the media can continue putting a happy face on uncontrolled mass-migration from Arab and Muslim lands, or suppress news reporting on rising migrant crime, but they cannot wish away the country's deteriorating law and order situation.
• It should be evident to even a casual observer that her government still does not care about the victims of its own failed "refugee" policy.

Monday's terrorist attack on a Berlin Christmas market killed at least 12 people and injured 50 others. Islamic State took responsibility for the truck-ramming attack, as recommend by the al-Qaeda magazine, Inspire, and similar to the July 14 attack in the French city of Nice, and countless car-rammings in Israel. Now Europeans feel what Israelis live with every day.

Police confer at the site of the December 19 car-ramming attack at a Christmas market in Berlin. (Image source: RT video screenshot)

Earlier this year, Germany was hit by a series of ISIS-inspired attacks and failed terror plots. Despite that almost all the perpetrators were recent Syrian or Afghan migrants, German Chancellor Angela Merkel, in the middle of a re-election bid, has stuck to her claim that there is "no connection" between terror attacks in the country and uncontrolled mass migration from Arab and Muslim lands.

Ahead of an election year, Merkel and her coalition partners also want to avoid another mass sexual attack — in Cologne.

Adding insult to injury, the Mayor of Cologne, Henriette Reker, is planning to put on a big show this coming New Year's Eve in the city's main square. After an elaborate year-long cover up, the city will be lighting up the crime scene as part of a multi-media show. "The City of Cologne has announced plans for a spectacular multi-media show in the area immediately surrounding the famous Gothic cathedral, close to the main train station," state-run broadcaster Deutsche Welle reported.

"Cologne will send good images to the world," says the city's mayor. The taxpayer-funded spectacle has been named "Time Drifts Cologne." The "light artist" running the show, Philipp Geist, considers last year's crime scene "a fantastic place for an art installation."

Of an estimated two thousand exclusively Muslim men who raped, assaulted and robbed more than 1200 women, almost all the attackers have managed to walk free. Ralf Jäger, Interior Minister of North Rhine-Westphalia, admitted recently that "most of the cases will remain unsolved."

An estimated 1,800 police officers will be on duty in Cologne on New Year's Eve, compared to just 140 last year. Barricades have been erected in the city center to check the flow of the crowd. The city's historic cathedral and adjoining area have been placed under a crush barrier. Police will man observation posts and fly helicopters to monitor the crowd, and deploy mounted police and six armoured vehicles for riot-control. "No expense will be spared," assured the mayor. In an important election year, the government wants to defend the city to the last taxpayer dime.

Even before it can face any real onslaught, however, Merkel's fortification is showing some serious cracks.

Just days ahead of the News Year's Eve, the police union in the eastern German state of Thuringia has issued an open letter describing the crumbling law-and-order situation amid the rising migrant crime. "[You] are abandoning us completely helpless to a superior force," says the desperate note addressed to the Interior Minister of Thuringia. The union claims that politicians have been repeatedly briefed on the deteriorating conditions under which police have been working. "But what changes? Nothing. One instead gets a sense of uninterest."

Unwilling to acknowledge the breakdown of law and order in face of the rising migrant crime wave, the German media and politicians are going after the messenger.

Their latest target is the head of German Police Union, Rainer Wendt. Wendt's crime, after a series of rape crimes this December, was to speak the obvious truth. "The criminals are using open borders," he said.

Ralf Stegner, deputy leader of Social Democratic Party (SPD) and a fervent supporter of Merkel's "Refugees Welcome" policy, denounced Wendt's statement as "politically disgusting and stupid as one can get."

Wendt has also been attacked for questioning the customary kid-glove treatment given to violent and criminal "refugees" by German courts. Sven Rebehn, Chairman of the German Association of Judges, called Wendt, "the Donald Trump of domestic politics" — apparently the biggest insult a German liberal can come up with these days.

The Merkel government can turn the center of Cologne into an impenetrable fortress for a day or two, but the threat is not going away. The problem lies in the Ruhr region that encircles Cologne. "Have foreign clans turned Ruhr region into a No-Go-Area?" asks the leading German newspaper, Die Welt, just days ahead of News Year's Eve.

Meanwhile, representatives of Arab community were reported telling the police in Ruhr, "The police will not win a war with us because we are too many."

Chancellor Merkel, Germany's ruling elites and the media can continue putting a happy face on uncontrolled mass-migration from Arab and Muslim lands, or suppress news reporting on rising migrant crime, as much as they want, but they cannot wish away the country's deteriorating law-and-order situation.

As the desperate plea of the police union shows, the Merkel government has decided to ignore the plight of law enforcement, at least for now. It should be evident to even a casual observer that her government still does not care about the victims of its own failed "refugee" policy: Germany appears to be heading toward another rough year.

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German police is searching for a Tunisian man after conveniently finding a temporary-stay permit under the driver’s seat of the truck that plowed into a Berlin Christmas market, killing 12 people, according to Spiegel Online. The man is aged 21 or 23 and known by three different names, according to reports in the daily Allgemeine Zeitung and the Bild newspaper. According to a slightly conflicting report, the document was in the name of Anis A., born in the southern city of Tataouine in 1992.

Anis A.

As a reminder the man who rammed a truck through a crowd in Nice during Bastille Day celebrations, killing 86, was also Tunisian-born.

Bild reported that the Tunisian was known to police as a possibly dangerous individual, and part of a large Islamist network. A police operation is said to be under way in the state of North Rhine-Westphalia where the permit was issued. Reports also say the suspect may have been injured in a struggle with the driver.

He applied for asylum in April and was given a temporary residence permit, the Sueddeutsche Zeitung said.

Police initially arrested a Pakistani asylum-seeker near the scene, but released him without charge on Tuesday. Authorities have warned that the attacker is on the run and may be armed. It is not clear if the perpetrator was acting alone or with others.

According to Reuters, the Polish driver of the killer truck was found shot dead in the cabin of the vehicle. An autopsy indicated that the driver was still alive at the time of the attack, the daily Bild reported. It quoted an investigator as saying there must have been a struggle with the attacker, who may have been injured. The 37-year-old Pole named Lukasz worked for his cousin Ariel Zurawski’s transport company in northern Poland. Zurawski described him as a “good guy” and said his body showed signs of a struggle with the assailant or assailants.

Islamic State has claimed responsibility, as it did for a similar attack in July when a Tunisian-born man rammed a truck through a crowd celebrating Bastille Day in the French city of Nice. Eighty-six people were killed, and the driver was shot dead by police.

The head of the Association of German Criminal Detectives, Andre Schulz, told German television late on Tuesday that police hoped to make another arrest soon. “I am relatively confident that we will perhaps tomorrow or in the near future be able to present a new suspect,” he said.

Meanwhile, Wednesday’s Passauer Neue Presse quoted the head of the group of interior ministers from Germany’s 16 federal states, Klaus Bouillon, as saying tougher security measures were needed.

“We want to raise the police presence and strengthen the protection of Christmas markets. We will have more patrols. Officers will have machine guns. We want to make access to markets more difficult, with vehicles parked across them,” Bouillon told the paper.

German Chancellor Angela Merkel, who will run for a fourth term next year, has said it would be particularly repulsive if a refugee, seeking protection in Germany, was the perpetrator. The Chancellor was slammed by the anti-immigrant Alternative for Germany (AfD) party, which has won support in the last two years as Merkel’s own popularity has waned, who said on Tuesday that Germany is no longer safe.

Some politicians have also called for changes to Merkel’s immigration and security policies after she allowed more than a million migrants to enter Germany in the last two years, many fleeing countries such as Syria, Iraq and Afghanistan. Bavarian Interior Minister Joachim Herrmann told German radio on Wednesday that there was a higher risk of Islamist attacks because of the influx of migrants.

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• Futures little changed after Dow, Nasdaq hit records (Reuters); Europe Stocks’ Rally Dims as Banks Drop; Oil Gains (BBG)
• Monte dei Paschi says could run out of liquidity after four months (Reuters)
• Spanish Banks Lose EU Case on Mortgage Interest Repayments (BBG)
• Russia says trust needed for global oil output deal to be success (Reuters)
• U.S. plays down absence from Moscow talks on Syria, says not ‘sidelined’ (Reuters)
• Leadership rivalry threatens ambitions of Italy’s 5-Star Movement (Reuters)
• Germany Rethinks Reluctance Toward Conspicuous Policing (WSJ)
• Clinton lawyer blasts FBI after email search warrant release (Reuters)
• PBOC’s Shadow Banking Curbs Risk Deepening Junk Bond Rout (BBG)
• Oil Extends Its Gains as Report Shows U.S. Stockpile Drop (BBG)
• Judge Says $25 Million Trump University Settlement Is Fair (BBG)
• Bring Back Jobs From China? In Shenzhen, They Aren’t That Worried (WSJ)
• Berlin Christmas markets shut, others tighten security (Reuters)
• Court Orders Airlines to Stop Dumping Poop During Flights (BBG)
• Big Banks Are Stocking Up on Blockchain Patents (BBG)
• Young Americans Living With Parents at a 75-Year High (WSJ)
• Coke moves away from AB InBev with Africa bottling deal (Reuters)
• Saudi Telecom says board approves $100 million Careem stake buy (Reuters)

 

Overnight Media Digest

WSJ

– Nearly 24 hours after Germany’s deadliest terror attack in decades, police said they had been holding the wrong man as their only suspect, reviving fears of more violence and escalating the hunt for at least one perpetrator at large. http://on.wsj.com/2hDFwxu

– Donald Trump’s choice for ambassador to Israel, David Friedman, has helped raise millions of dollars for a prominent West Bank settlement, a connection that could complicate the president-elect’s promised effort to revive Israeli-Palestinian peace talks. http://on.wsj.com/2h86qgq

– Powerful blasts ripped through a sprawling fireworks market outside Mexico City on Tuesday, killing at least 29 people and injuring scores more, the third time in 11 years that the market has been destroyed by such explosions. http://on.wsj.com/2hSUYXb

– The assassination of Russia’s ambassador to Turkey and the apparent terror attack on a Berlin Christmas market underscore the global tinderbox President-elect Donald Trump is set to inherit in coming weeks, and his initial response suggests his White House will take a sharply different approach to such unexpected crises. http://on.wsj.com/2hPIMUL

– The U.S. federal government is increasingly taking money out of Americans’ Social Security checks to recover millions in unpaid student debt, a trend set to accelerate as more baby-boomers retire. http://on.wsj.com/2hWthtA

– Volkswagen AG has agreed to pay around $1 billion to repurchase or fix an additional batch of diesel-powered vehicles tainted with emissions-cheating software, resolving what had become a sticking point more than a year into Volkswagen’s diesel-emissions crisis. http://on.wsj.com/2h0nD83

 

FT

– A baggage handler strike which threatened to disrupt Christmas travellers to and from the U.K. was called off, with the leader of the union concerned rejecting allegations that the series of recent strikes has been coordinated to damage the government.

– Germany’s Linde and U.S. rival Praxair unveiled preliminary terms of a long-delayed and much scrutinised $65 billion merger that would create the world’s largest supplier of industrial gas. Agreement comes after deal talks collapsed in September in the face of dissent from Linde’s workers and from its finance director.

– Lawsuits have been brought by BNP Paribas, Société Générale, Crédit Agricole, Crédit Mutuel, BPCE and La Banque Postale over the past month against the European Central Bank in an attempt to get an exemption from holding capital against certain state-backed deposits.

– U.S. regulators and Volkswagen reached a deal to get 80,000 3.0-litre cars equipped with emission-cheating software off the roads. The German carmaker agreed to buy back up to 20,000 units while it offered a recall on the rest to fix them.

 

NYT

– Brazilian companies Odebrecht SA and Braskem SA , which were under investigation on bribery charges both in the United States and abroad, are expected to reach a settlement and could pay a total of $3 billion, with the bulk likely to go to Brazil. http://nyti.ms/2hTs0pV

– Adam Messinger, Twitter Inc’s chief technology officer, said in a Twitter message on Tuesday that he was leaving the company. His departure follows that of Adam Bain, Twitter’s chief operating officer, who exited last month. http://nyti.ms/2hTk6wZ

– Volkswagen AG agreed on Tuesday to buy back or fix the remaining diesel cars caught up in its emissions cheating scandal, at an expected cost of about $1 billion, in what has become one of the United States’ largest consumer class-action settlements ever. http://nyti.ms/2hTel2c

– Nielsen Holdings Plc, a ratings and consumer-research company that has been struggling to adapt to a changing media landscape, announced Tuesday that it was buying Gracenote, a specialist in entertainment data, from Tribune Media Co for $560 million. http://nyti.ms/2hTgQ4D

 

Canada

THE GLOBE AND MAIL

** The Liberal Canadian government has joined with U.S. President Barack Obama to restrict oil and gas development in Arctic waters, and regulate fisheries and shipping lanes as the ice cover recedes as a result of climate change. https://tgam.ca/2ievos2

** Russia’s ambassador to Canada said the upcoming NATO deployment in Latvia – that Canadian soldiers will lead to deter Moscow’s aggression in eastern Europe – would be bad for regional security and an unwise diversion of resources from fighting extremism. https://tgam.ca/2h9pcE0

** Canadian Prime Minister Justin Trudeau said he accepted the likelihood of protests against his government’s controversial approval of the Trans Mountain pipeline expansion, but they wouldn’t weaken his resolve on the issue and even First Nations have no veto on the project. https://tgam.ca/2hUnDuR

NATIONAL POST

** The federal Conservatives called on the Trudeau Foundation to stop accepting foreign donations after a National Post analysis showed foreign donations increased tenfold since Canadian Prime Minister Justin Trudeau won the Liberal leadership. http://bit.ly/2hFVirU

** The Toronto Transit Commission might have inadvertently said Apple Pay and Android Pay support is coming soon to the city’s transit system on Tuesday, though some users said it already works on some routes. http://bit.ly/2ieCKvB

 

Britain

The Times

– Uber Technologies Inc lost more than $2 billion in the first nine months of the year as it poured money into expanding its taxi-hailing app across the world. http://bit.ly/2hXIjzk

– British Prime Minister Theresa May has forced Deloitte to withdraw from Whitehall contract bids for six months after one of its staff wrote a memo detailing Brexit strains at the heart of government. http://bit.ly/2hXDRRb

The Guardian

– A planned strike by UK airport baggage and check-in staff at 18 airports has been called off, the trade union Unite representing them has announced. http://bit.ly/2hXGeU2

– Police forces across Britain are reviewing their security plans after the Berlin Christmas market attack and remain on high alert. http://bit.ly/2hXEeuY

The Telegraph

– The BBC Trust, the governing body that is soon to be scrapped, gave the go-ahead for BBC Studios, a new subsidiary that will aim to make programmes for ITV, Channel 4 and international buyers such as Netflix. http://bit.ly/2hXuQaC

– Lloyds Banking Group Plc is preparing to take on Barclaycard after swooping on credit card firm MBNA Corp for 1.9 billion pounds ($2.35 billion). http://bit.ly/2hXDaYd

Sky News

– British finance minister Philip Hammond is to publish his next Budget on March 8 – just weeks before the deadline for triggering the Brexit process. http://bit.ly/2hXBe1w

– Sean Bratches, a former executive at the sports broadcaster ESPN, has been approached by Chase Carey, Formula One’s new chairman, about assuming responsibility for activities likely to encompass marketing, sponsorship and media rights alliances. http://bit.ly/2hXFRZG

The Independent

– Militant group ISIS claimed responsibility for the massacre that targeted Germans and tourists enjoying one of Berlin’s most popular Christmas market, calling the perpetrator a “soldier of the Islamic State” obeying calls to attack members of the U.S.-led coalition. http://ind.pn/2hXyD89

– Theresa May’s government will need to take a “whole economy” approach to avoid leaving sectors behind after Brexit, the Confederation of British Industry (CBI) warned. http://ind.pn/2hXLXJA

 

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In early European trading, shares of Italy’s third largest and most troubled bank were halted after crashing 17%, dropping to fresh all time lows, after the bank warned it is not only insolvent, but its liquidity could run out far sooner than expected.

BMPS shares initially dropped following yesterday’s news that the €5 billion private sector rescue plan appeared to be a dead end, after only €500 million in new capital was said to have been lined up, coming far short of the targeted bogey. An analysis by Swedbank said that adverse reports about Paschi’s efforts to find private capital are “quite discouraging” and added that “it seems as if a government intervention comes closer by the day.” It also noted that that government intervention that also abides by BRRD (Bank Recovery and Resolution Directive) rules will punish equity and junior bond holders, which is a major concern.

This was, however, compounded after Monte Paschi warned it expects to burn through around €11 billion euros of liquidity more quickly than previously forecast, according to a revised prospectus on the bank’s website. The world’s oldest bank said it now expected its net liquidity position, currently standing at €10.6 billion, to turn negative after four months. This was a sharp deterioration from the most recent liquidity update just three days prior, when on Sunday the bank had forecast that a current net liquidity position would turn negative after 11 months under a number of assumptions. It said on Wednesday the position would be negative for 15 million euros on the 5th month and could worsen further to minus 740 million euros by the 12th month. This compares with the minus 100 million-euro level it forecast on Sunday for the 12th month.

The bank also noted that it had lost 11%, or €14 bilion, of its total deposits from January to September 2016, and added that its liquidity levels would fall under the required level should it suffer another €10bn of deposit outflows under a “stress” scenario calculated by the European Central Bank. From the prospectus, as quoted by the FT:

The situation of the liquidity of the bank had progressively deteriorated until it reached, following the constitutional referendum of December 4, a time horizon of 29 days before which the bank would not be able to meet its liquidity requirements without seeking help from new interventions. That time horizon was calculated applying a stress situation where the bank saw an outflow of €10.3bn in a month.

However, just as the situation appeared terminally grim for the twice-bailedout bank, its shares soared briefly recovering all losses when moments ago Italy’s upper house of parliament approved a government request to borrow up to €20 billion in new public debt to underwrite bailouts of the country’s various troubled banks. The vote came just minutes after the lower house had also given its authorisation for a hike in the national debt to cover an eventual intervention.

The twin votes clear the way for government action, possibly this week, and the result was a bout of optimism that Italy may just have kicked the can one more time, on expectations Monte Paschi would quickly request state funds to prevent it from collapse.

Amusingly, earlier in the day, Italy’s Finance Minister Padon told lawmakers that the “Italian banking system was solid.” Maybe it is for the next few months, and all it will cost taxpayers is another €20 billion in public debt.

We now await Germany’s statement on what appears to be yet another government bailout of insolvent European banks.

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Trumpenstein ! Our Creation – Foretold 157 Years Ago

The election of Donald Trump has cast the political elite around the world into a state of shock. His arrival, so soon after the titanic Brexit vote, has profoundly undermined the neo liberal political status-quo that has dominated western economies over the past 30 years.

“Trumpenstein” © GoldCore

What was unthinkable has become reality and the future is as uncertain as it has ever been. However, his election was foretold 157 years ago by the English philosopher John Stuart Mill. As such, the conditions and causes that ushered in the Trump era could not have been clearer.

In an echo chamber of neo liberal ideology, the cosy cartel of press and politician alike traded information, scoops and leaks back and forth with ease. They became blinded to growing discontent, the numbers of disconnected and the genuine concerns of a growing mass of minorities within our society.

For decades, their concerns have been largely ignored as globalisation and liberal economic policies reduced their financial security, buffeted their communities and increased the debt burden which they have been forced to take out.

In his book “On Liberty” Mill warned about this effect where a majority within a democratic society can behave tyrannically against the genuine beliefs and concerns of the minority, depriving both sides the right to debate and refute arguments and thus prompting the loss of democratic cohesion.

John Stuart Mill (Wikimedia)

Many highly informed politicians, historians, business people and everyday folk have for decades thought that the circumstances that brought the world to war in the 1930’s could never be repeated. They believed that by building so-called free and inclusive societies, where an individual could associate, speak and choose how to live their life freely and democratically, the conditions would be created where economic progress would be all but assured.

But Mill argued that this is not enough, society must actively support the minority’s right to express all concerns no matter whether the belief is right, wrong or even dangerous.

The reason for Trump’s arrival are numerous, primarily though they are based on deep social undercurrents that have been building for many years and have been hiding in plain sight.

His election is less about the rise of a new way or a new republican political corporatism, where billionaires are suddenly seen as political saviors, but rather it is more to do with high levels of deep anxiety, frustration, isolation and social dissension where swathes of western populations have been politically, economically and socially left behind and/or ignored by globalisation and its neo-liberal cheerleaders, press and politicos alike.

Make no mistake, Donald Trump is an anti-candidate; anti-status quo, anti-elite, anti-liberal. His election is a demand for attention, for debate and for dialogue from those who have been ignored and bypassed. In time his election may well be seen as one of the finest demonstrations of democratic principles the world has ever seen and democracies will hopefully, assuming they survive, be stronger for it.

So how was this election foretold?
Well, please allow me a word about the backstory that is “Globalisation”.

Globalisation has been on a rage since the 1960’s when the first truly transnational corporations spread across the globe seeking integrated, optimised supply chains and access to new prosperous marketplaces, cheaper capital, and of course low cost workers.

These corporations delivered cheaper, faster, better quality goods to more and more markets, disrupting indigenous craft industries, old fashioned and state protected and inefficient industrial complexes.

They played not only regulatory arbitrage but they also played accounting arbitrage, optimised their balance sheets (liability and asset) using transnational tax efficient strategies designed to pay as little tax on their burgeoning profits, providing increased earnings and capital growth to their shareholders and executive teams.

Globalisation, though, was never really understood by the masses. No one explained what would happen to local jobs, services, lifestyles, communities – in short they never bought in.

It was thrust upon societies and at first very much welcomed. Everybody was a winner. Western economies enjoyed new cheaper goods, access to new markets, new higher paid jobs, requirements for new skills and so on. In fact, recent research by MIT shows that the productivity of companies grew at the same pace as the prosperity of workers from the 1960’s right through to 2000.

This is when the relationship stopped. Companies continued to see gains, but workers did not. In fact, their wages stagnated, their debts grew and they had to work harder for the same or less reward. Systemic risk started to build.

The exact same forces are now also guiding Europe towards a potential break up. European communities are neither engaged nor participating. Most Europeans do not know who their MEPs are, never mind what their views are on any issues that they deem pertinent. Sadly, the EU is seen as a monolithic, impenetrable technocratic gravy train for the politically and financially connected.

Domestic governments often reward their supporters with plum jobs in Brussels as a reward for their support domestically. Central banks money printing and largess benefits the already asset rich banks, financial institutions and wealthy elites.

This is where we are today – 16 years on and people are now calling a halt to Globalisation. Importantly not because they know what the exact problem is, but because those who say they know, don’t know. In short, they have called the political elites bluff and they wish to get rid of them all.

We should have known better
It is called “Social Tyranny” and it was prescribed as one of the most dangerous forces effecting liberal democracies by John Stuart Mills in his highly celebrated book “On Liberty”.

Mills was an ardent supporter of liberal democracies, women’s rights and the rights of the individual to hold his/her own opinion freely. In fact, he believed that the individual had the right to be wrong, even if his views were deemed dangerous by the state.

He felt that governments had to not only protect the right to freedom of expression, thought, etc., but also to actively encourage the right of minorities to speak and be heard. Most importantly he believed that the greatest dangers facing a society were not despotic regimes, but the tyranny of the majority.

That is to say that when a society is captured by a majority and its narrow beliefs they tend to ignore the concerns and beliefs of the minority, the underclass, the marginalised. In doing so they force these beliefs underground, where they fester and remain unanswered.

Tyranny of the majority
Majority ruled societies can practice a form of oppression more formidable than many kinds of political oppression.

Why? Because it leaves fewer means of escape, penetrating far more deeply into the very detail of life and thus enslaving the soul itself. When society itself is the tyrant, its means of tyrannising are not restricted to the acts of political operators. Society practices a social tyranny more formidable than many kinds of political oppression.

Social pressures are not always explicit, they can be soft, enduring, breaking the self-down – then people just withdraw. Mill says they are a “social evil” as they effectively reduce our liberty, our freedom to think freely. If a society is to provide a meaningful life for its citizens it must actively discourage such forces and not leave the citizen alone to fend off the tyranny of the mass media and the masses.

But why should a modern society support beliefs of the so-called ignorant, dangerous and recently named “populist”?

In his “Dilemma argument”, Mills was emphatic. Societies may view some beliefs as being wrong, in that case, he counter argues that given time they may be found not to be wrong and when they are wrong, then, via debate, society can refute.

For beliefs that are dangerous then they should be aired and equally refuted and in doing so they will lose their support and die away. Why deny the right of society to argue against beliefs that are dangerous or wrong, if you do so by bullying or beating such beliefs into ideologic submission, you simply force the beliefs underground where they go unanswered and where they fester.

Mills argues for plurality of opinion, that when we debate we learn and we grow as individuals and as societies. When people have varying interests and tastes and beliefs the happiness of society not only increases but it also grows stronger. Diversity is the key to our robustness.

Those rare individuals who go against the grain (some even buy gold!) are the ones who also drag us out of our comfort zones and, through their diversification of beliefs, make societies more financially robust.

To quote Mill:

“He who lets the world choose his plan of life, lives a life of apelike imitation, he who choose a life plan for himself, uses all his faculties”

The election of Trump can be seen as a statement of the minorities who have been ignored and over looked. They live in the “flyover” states. On November 8th 2016 they stood up, on mass, and demanded to be heard. Their values are not solely based on GDP, competitiveness, free movement of goods, open borders, stock market returns and ‘Dow 20,000’.

Rather, they want economic security, fulfilling jobs, stable communities, the right to be wrong, the right to be heard, to be respected and the right to be engaged with as equals.

(Wikimedia)

So what next
The world has changed and democracy has been tested. Our media, who became captured in an echo chamber of neo-liberal rhetoric, are undergoing a painful period of self examination.

I hope, as a society, we will learn from this period and perhaps realign our values to promote the individual and not the corporate, the local community and not the global and most importantly we learn to listen and debate and respect each other, regardless of social status, wealth or belief.

Gold and Silver Bullion – News and Commentary

Gold buoyed as geopolitical tensions offset stronger dollar (CNBC.com)

Gold settles higher after string of weekly declines (MarketWatch.com)

Singapore Exchange Announces World’s First Shariah Gold Futures Contract (Reuters.com)

Nine Dead After Truck Rams Into a Christmas Market in Berlin (Bloomberg.com)

China Stocks Retreat to Six-Week Low Amid Bond Market Selloff (Bloomberg.com)

(Image Source: Bloomberg)

Gold to $5,000?: Legendary Gold Investor Sinclair Warns Great Reset Soon (JSMineSet.com)

Donald Trump Seals Electoral College Victory, Officially Becomes 45th US President (ZeroHedge.com)

Tsipras’s spending spree may be relief, but won’t end crisis – Guardian (TheGuardian.com)

Free cash in Finland. Must be jobless. – CNBC (CNBC.com)

Five reasons Fed won’t hike even twice in 2017 – Mish (MishTalk.com)

A pensions time bomb spells disaster for the US economy – (BusinessInsider.com)

Gold Prices (LBMA AM)

20 Dec: USD 1,132.75, GBP 915.94 & EUR 1,090.84 per ounce
19 Dec: USD 1,137.60, GBP 913.15 & EUR 1,089.14 per ounce
16 Dec: USD 1,134.85, GBP 911.17 & EUR 1,084.80 per ounce
15 Dec: USD 1,132.45, GBP 904.37 & EUR 1,080.70 per ounce
14 Dec: USD 1,160.95, GBP 917.38 & EUR 1,091.99 per ounce
13 Dec: USD 1,157.35, GBP 911.18 & EUR 1,090.80 per ounce
12 Dec: USD 1,154.40, GBP 916.82 & EUR 1,089.41 per ounce

Silver Prices (LBMA)

20 Dec: USD 15.80, GBP 12.80 & EUR 15.22 per ounce
19 Dec: USD 16.00, GBP 12.89 & EUR 15.34 per ounce
16 Dec: USD 16.05, GBP 12.91 & EUR 15.36 per ounce
15 Dec: USD 16.14, GBP 12.95 & EUR 15.51 per ounce
14 Dec: USD 17.11, GBP 13.52 & EUR 16.07 per ounce
13 Dec: USD 17.01, GBP 13.39 & EUR 16.04 per ounce
12 Dec: USD 16.86, GBP 13.34 & EUR 15.90 per ounce

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