Tag Archives: Spain

Salvini: “Italy Will No Longer Accept Refugees” As Spain Volunteers, by Tyler Durden

Italy has decided to play hardball with refugees. From Tyler Durden at zerohedge.com:

Over the weekend, Italy once again roiled Europe, only this time not with its plunging bonds but with its drastic shift in immigration politics, when the country’s new populist leader, Matteo Salvini, now operating as Minister of the Interior, made good on his warning last weekend that “the good times for illegals are over”, writing an urgent letter ordering Malta to accept a ship carrying 629 shipwrecked North African migrants currently sitting off the Italian coast – calling Malta the “safest port” for the passengers, and advising that Rome will no longer offer refuge.

The MV Aquarius

The Italian message to Europe was simple: having been the port of landing for tens of thousands of migrants in the past two years, Rome would no longer accept boat after boat of North African (or middle eastern) refugees.

Italy’s vocal resistance to accepting further migrants even prompted prominent globalist George Soros, the person many have accused of being behind Europe’s forced migration patterns, to urge the EU to compensate Italy for the 100,000+ migrants landing there, noting that the strong showing of far-right parties partly is due to Europe’s ‘flawed’ migration policies.

As for Italy’s “suggestion” that the Mediterranean island of Malta accept the migrants, not surprisingly it fell on deaf ears.

But if Italy (and Malta) would no longer accept migrants, and with Merkel’s “open door” policies in Germany now a taboo, the question remained: who would accept the countless boats of migrants still headed for Europe?

Moments ago we got the answer when that “other” PIIG, Spain, offered on Monday to take in the rescue ship MV Aquarius, that has been drifting in the Mediterranean sea with 629 migrants stranded on board after Italy and Malta refused to let it dock.

Spain’s Prime Minister Pedro Sanchez, who took office just over a week ago, has given instructions for the boat to be admitted to the eastern port of Valencia, his office said in a statement.

To continue reading: Salvini: “Italy Will No Longer Accept Refugees” As Spain Volunteers

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Italy, the ESB and Europe’s Populist Fantasyland, by Daniel Lacalle

There is no law that says a government has to live beyond its means and go into debt, even though that’s what most of them do. From Daniel Lacalle at dlacalle.com:

The populist coalition in Italy has presented an “economic” program and a threat to the European Union that makes Greece look like a walk in the park.

Let us start with reality.

Italy’s economic problems are self-inflicted, not due to the Euro.

  • Italy has seen more governments since World War II than any other country in the European Union.
  • Governments of all colors have consistently promoted inefficient dinosaur “national champions” and state-owned semi-ministerial corporations at the expense of small and medium enterprises, competitiveness and growth.
  • Labor market rigidities remained, leaving high unemployment and differences between regions.
  • A perverse incentive financial system, where banks were incentivized to lend to obsolete and indebted state-owned companies in their disastrous empire-building acquisitions, inefficient municipalities, as well as finance bloated local and national government spending. This led to the highest Non-Performing Loan figure in Europe.
  • A nightmare legal system that makes it virtually impossible to repossess assets from bad debt, led non-performing loans through the roof and malinvestment to soar.
  • A thriving export and small enterprise ecosystem were constantly limited by taxation and bureaucracy. This made the thriving companies smaller and actively looking to set activities outside of Italy.

Because of this, government spending continued to rise well above revenues. As Italy -like Spain and Portugal- decided to penalize high-productivity sectors with rising taxes, revenues fell short, while expenditures continued to rise. Italy, like so many peripheral countries, created a massive “crowding out” effect of the public sector against the private. It is not a coincidence that most citizens in Italy, like Spain or Portugal, prefer to be civil servants than entrepreneurs.

It is no wonder that, while private companies managed to survive and improve “despite government”, debt and non-performing loans soared.

Now they blame the Euro. As if the same crowding out would not have happened outside.  The only difference is that outside the Euro the government would have destroyed savers and citizens through constant “competitive devaluations” that were the cause of the economic weaknesses of the past. Constant devaluations did not make Italy, Spain or Portugal more competitive, they made them perennially poor and perpetuated their imbalances.

To continue reading: Italy, the ESB and Europe’s Populist Fantasyland

 

This is the End of the Euro, by Raúl Ilargi Meijer

The real mystery is how they’ve been able to keep the euro going as long as they have. From Raúl Ilargi Meijer at theautomaticearth.com:

The Spanish government is about to fall after the Ciudadanos party decided to join PSOE (socialist) and Podemos in a non-confidence vote against PM Rajoy. Hmm, what would that mean for the Catalan politicians Rajoy is persecuting? The Spanish political crisis is inextricably linked to the Italian one, not even because they are so much alike, but because both combine to create huge financial uncertainty in the eurozone.

Sometimes it takes a little uproar to reveal the reality behind the curtain. Both countries, Italy perhaps some more than Spain, would long since have seen collapse if not for the ECB. In essence, Mario Draghi is buying up trillions in sovereign bonds to disguise the fact that the present construction of the euro makes it inevitable that the poorer south of Europe will lose against the north.

Club Med needs a mechanism to devalue their currencies from time to time to keep up. Signing up for the euro meant they lost that mechanism, and the currency itself doesn’t provide an alternative. The euro has become a cage, a prison for the poorer brethren, but if you look a bit further, it’s also a prison for Germany, which will be forced to either bail out Italy or crush it the way Greece was crushed.

Italy and Spain are much larger economies than Greece is, and therefore much larger problems. Problems that are about to become infinitely more painful then they would have been had the countries been able to devalue their currencies. If you want to define the main fault of the euro, it is that: it creates problems that would not have existed if the common currency itself didn’t. This was inevitable from the get-go. The fatal flaw was baked into the cake.

And if you think about it, today the need for a common currency has largely vanished anyway already. Anno 2018, people wouldn’t have to go to banks to exchange their deutschmarks or guilders or francs, they would either pay in plastic or get some local currency out of an ATM. All this could be done at automatically adjusting exchange rates without the use of all sorts of middlemen that existed when the euro was introduced.

To continue reading: This is the End of the Euro

Italian Bonds Tumble, Triggering Goldman “Contagion” Level As Political Crisis Erupts In Spain, by Tyler Durden

Italy’s new anti-establishment coalition government is making all sorts of noises not designed to make creditors feel comfortable. They’re responding by raising Italy’s interest rates. From Tyler Durden at zerohedge.com:

When it comes to the latest rout in Italian bonds, which has continued this morning sending the 10Y BTP yield beyond 2.40%, a level above which Morgan Stanley had predicted fresh BTP selling would emerge as a break would leave many bondholders, including domestic lenders with non-carry-adjusted losses…

… there has been just one question: when does the Italian turmoil spread to the rest of Europe?

One answer was presented yesterday by Goldman Sachs which explicitly defined the “worst-case” contagion threshold level, and said to keep a close eye on the BTP-Bund spread and specifically whether it moves beyond 200 bps.

Should spreads convincingly move above 200bp, systemic spill-overs into EMU assets and beyond would likely increase. Italian sovereign risk has stayed for the most part local so far. Indeed, the 10-year German Bund has failed to break below 50bp, and Spanish bonds have increased a meager 10bp from their lows. This is consistent with our long-standing expectation that Italy would not become a systemic event. That said, should BTP 10-year spreads head above 200bp, the spill-over effects onto other EMU sovereigns would likely intensify.

Well, as of this morning, the 200bps Bund-BTP level has been officially breached. So, if Goldman is right, it may be time to start panicking.

Ironically, almost as if on cue, just as the Italy-Germany spread was blowing out, a flashing red Bloomberg headline hit, confirming the market’s worst fears:

  • SPANISH SOCIALISTS REGISTER NO-CONFIDENCE MOTION AGAINST RAJOY.

This confirmed reports overnight that Spain’s biggest opposition party, the PSOE or Socialist Party, was pushing for a no-confidence motion again Spain’s unpopular prime minister. The no-confidence call follows the National Court ruling on Thursday that former Popular Party officials had operated an illegal slush fund, as a result of which nearly 30 people were sentenced to a total of 351 years in prison.

To continue reading: Italian Bonds Tumble, Triggering Goldman “Contagion” Level As Political Crisis Erupts In Spain

World’s Most Wanted Bank Whistleblower Was Just Arrested, for the Worst Possible Reason, by Don Quijones

Will Spain turn over a whistleblower to Switzerland in exchange for two Catalonian separatists held by the Swiss? It would be a sordid deal. From Don Quijones at wolfstreet.com:

For a prisoner exchange between Switzerland and Spain? 

Hervé Falciani, the French-Italian former HSBC employee who blew the whistle on HSBC and 130,000 global tax evaders in 2008, has been arrested in Madrid on Tuesday in response to an arrest warrant issued by Switzerland for breaking the country’s bank secrecy laws.

He lives in France, which rarely extradites its own citizens. But when Spanish authorities learned that he was in town to speak at a conference ominously titled, “When Telling the Truth is Heroic,” they made their move. If he is extradited to Switzerland he could face up to five years in prison.

Falciani worked as a computer technician for HSBC’s Swiss subsidiary. One day in 2008, he left the office with five computer disks containing what would eventually become one of the largest leaks of banking data in history.

According to Swiss authorities, Falciani stole and then attempted to sell a trove of confidential data. Falciani says he was a whistleblower who wanted to expose a “broken” banking system, “which encouraged tax evasion.”

When much of the stolen data was leaked to the press in 2015, it revealed, among other sordid things, that HSBC’s Swiss subsidiary routinely allowed clients to withdraw “bricks of cash,” often in foreign currencies of little use in Switzerland. It also colluded with clients to conceal undeclared “black” accounts from their domestic tax authorities and provided services to international criminals, corrupt businessmen, shady dictators and murky arms dealers.

As Falciani would soon find out, snitching on one of the world’s biggest banks and 130,000 of its richest clients does not make you a popular person in a country famed for its banking secrecy. In 2014 he was indicted in absentia by the Swiss federal government for violating the country’s bank secrecy laws and for industrial espionage. A year later he was sentenced by Switzerland’s federal court to five years in prison – the “longest sentence ever demanded by the confederation’s public ministry in a case of banking data theft.”

To continue reading: World’s Most Wanted Bank Whistleblower Was Just Arrested, for the Worst Possible Reason

Playing With Fire in Catalonia, by Don Quijones

Here’s a good update on the Catalonia situation, which has for  the most part dropped out of the news. From Don Quijones at wolfstreet.com:

A relentless state, angry demonstrations, and profoundly worried businesses.

The ever-worsening political standoff between Spain and Catalonia is beginning to take a toll on credit markets, as banks refuse to renegotiate the terms of loans granted to companies with operations in the separatist region. One of the first victims is the British fund John Laing Infrastructure which, in its 2017 annual report, divulged some of the problems it faced trying to refinance a €700 million loan for work on section two of Barcelona Metro’s Line Nine.

The fund owns 53.5% of the concessionaire operating the fifteen stations on the line’s southern section. The other partners include Iridium, a subsidiary of the Spanish infrastructure giant ACS, and Queenspoint, a fund part owned by German insurance giant Allianz and the Danish pension fund ATP.

One of the main reasons why the banks involved don’t want to soften the credit conditions of the loan is that Barcelona’s metro depends on Catalonia’s regional government for funds. Building on Line 9 began in 2005 but was temporarily halted at the height of Spain’s financial crisis due to a funding shortage. Thirteen years later, the project is still far from complete and further progress is unlikely to be helped by the political chaos engulfing the region.

In the last fortnight alone Pablo Llarena, the Supreme Court’s judge in charge of the main investigation against Catalan secessionists, has indicted 25 Catalan leaders, put five who had previously been released on bail back in pretrial detention (for up to four years), and issued European Arrest Warrants against six pro-independence figures who have fled Spain. They include former regional President Carles Puigdemont who is presently occupying a jail cell in northern Germany awaiting a decision on his extradition.

To continue reading: Playing With Fire in Catalonia

Spanish Government Uses Hate Speech Law To Arrest Critic Of The Spanish Government, by Tim Cushing

Hate speech laws are being directed in Spain against those who hate the government. How else are honest people supposed to feel about their government? There is certainly nothing loveable about Spain’s government. From Tim Cushing at techdirt.com:

from the shocked-SHOCKED-to-find-such-a-predictable-use-of-a-bad-law dept

Spain’s government has gotten into the business of regulating speech with predictably awful results. An early adopter of Blues Lives Matter-esque policies, Spain went full police state, passing a law making it a crime to show “disrespect” to law enforcement officers. The predictable result? The arrest of someone for calling cops “slackers” in a Facebook post.

Spain’s government is either woefully unaware of the negative consequences of laws like this or, worse, likes the negative consequences. After all, it doesn’t hurt Spain’s government beyond a little reputational damage. It only hurts residents of Spain. When you’re already unpopular, thanks to laws like these and suppression of a Catalan independence vote, what difference does it make if you’re known better for shutting down dissent than actually protecting citizens from hateful speech?

One Catalan resident is getting the full “hate speech” rap-and-ride.

A Catalan high school teacher, Manel Riu, appeared in court on Thursday accused of hate speech for his tweets and Facebook posts criticizing Spain, government members and the Guardia Civil police. Over a hundred people escorted him to court in Tremp, west of Catalonia, where he denied any wrongdoing and asked for the case’s dismissal.

As a Catalan, Riu certainly has reason to criticize the Spanish government. During the last attempted referendum, the Spanish government sent police to seize ballots, voters’ cellphones, and ordered Google to remove a voting location app from the Play store. The evidence against Riu is composed of 119 tweets gathered by the Guardia Civil, Spain’s oldest law enforcement agency — one that blurs the line between playing soldier and playing cop far more often than its US counterparts.

To continue reading: Spanish Government Uses Hate Speech Law To Arrest Critic Of The Spanish Government