Global Analysis from the European Perspective. Preparing for the world of tomorrow


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TARGET2; European Banking Crisis is Escalating Again

Problems of Deutsche Bank, Commerzbank, Monte dei Paschi and other German, Italian and Spanish banks are not the only concern of the European Banking System. Trouble is much deeper than it is thought because there is a systemic imbalance that has been increasing for almost ten years. Politicians do not want to tell us the truth, but soon we will experience the same crisis in the Monetary Union as we did in 2012.

The extent of the problems in the European Banking System is TARGET2 and its balances of the National Central Banks of the Eurosystem. These balances, or rather imbalances, reflect the direction of the capital flight. And there is only one way: from Southern Europe into Germany. After Mario Draghi’s famous words “I do whatever it takes to save the euro”, things seemed to improve; however, since January 2015 problems have been escalating again. Continue reading

Brexit Has Little Relevance

From an economic point of view, Brexit is not a big issue as we have already warned many times. We informed our readers beforehand that fear-mongering by Soros, Zerohedge and their likes would result in an unjustified market sell-off. We do not believe that global economy is doing fine, and we see enormous trouble ahead. With the absence of a sustainable global growth, hedge fund managers try to create turbulence in the market to reap a profit.

In the first seconds of June 24 trading day, just as the Brexit results were announced, the losses (and profits) due to the engineered panic were gigantic. If we only take a closer look at the numbers for the ESX, DAX and FTI futures, more than 200 million euros evaporated within one day. Because this is a zero-sum game, somebody must have made unbelievable profits. Continue reading

Brexit: Germany Gains Power From Merkel’s Disastrous Policy

As we predicted, Cameron resigns after the British have cast “a leave vote” but Germany’s Chancellor Merkel is to blame for the disastrous result of the referendum.

Last year she mishandled three problems:

 

  1. In 2015, under Angela Merkel’s leadership, the problems in Greece span out of control and Yanis Varoufakis, the finance minister of Greece, was able to jeopardize the whole euro project;

  2. When in 2015 millions of refugees were heading for Europe, it was Angela Merkel that single-handedly, without consulting her political counterparts in Warsaw, London or Rome, decided how Europe had to deal with it ;
  3. Chancellor Merkel held talks with Erdoğan: Turkey was being considered as a member-state of the European Union, which lacked any support in Europe whatsoever .

No wonder the British voters came to doubt the democratic legitimacy of Brussels as they saw Berlin mishandle the European project. Continue reading

After the Brexit Referendum, a Fiscal Union Will be Brussels’ Surprise

The process of drawing up a joint EU budget has just commenced: it is the first step to a fiscal union. The idea of having a joint budget has long been pushed forward by the proponents of a more tight integration, just as it has been opposed by the European population at large. The term budgetary or fiscal capacity should be properly understood: it is a joint budget for the eurozone that will be governed by a real treasury in Brussels. To create a collective treasury, Europe’s social and economical model has to be brought in line. For this, Brussels wants all minimum wages to be equal. Martin Schulz, the President of the European Parliament, announced drastic reforms after the Brexit referendum. Following 23 June the aforementioned process of integration will gain momentum and it is likely to encounter upheavals because there is widespread aversion to federalization. Continue reading

Germany is Now the Sole Dominant Economic Power in Europe

The European Union does Germany a lot of good. To say that the country would develop better or worse without the common currency would be risky. However, the fact is that Germany is doing much better than other EU-members and the Eurozone has never been so dominated by one country. Germany has been growing faster at the regional as well as at the national level and has been gaining its relevance at others’ expense. Accusations of German supremacy may well be grounded, but then the question is who is to blame? Those who are able to improve or those who are lagging behind? Continue reading

Eurostat Data Shows That ECB Policy Has Failed Miserably

Since the ECB started its QE program in March last year, it has bought 0.6 trillion euros’ worth of government bonds. European Quantitative Easing was introduced by Mario Draghi to boost the euro zone economy.

The latest  Eurostat data show that the move has failed miserably, with a scant 1.5% year Eurozone growth to date, which is a huge disappointment if one takes into consideration the QE program with a size of 6% of the total Eurozone GDP. Continue reading

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For the first time in our history, in an increasingly multipolar external world, so many are becoming openly anti-European, or Eurosceptic at best. Particularly the change in Washington puts the European Union in a difficult situation; with the new administration seeming to put into question the last 70 years of American foreign policy. Source European Council



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The euro may not exist in 10 years’ time if Paris and Berlin fail to bolster the single currency union, French presidential candidate E Macron said, adding the current system benefited Germany at the expense of weaker member states. Macron was economy minister under Hollande, he resigned this year and stand as an independent candidate in this year’s presidential election. Source Reuters


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