Italy Dependent On ECB “Buyer Of Last Resort” As Foreign Investors Dump Bonds Amid Capital Flight


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Authored by Mike Shedlock via MishTalk.com,

Italy is increasingly dependent on the ECB to hold down bond yields as foreign investors dump Italian bonds like mad.

Eurointelligence bills this as Further Evidence of Capital Flight in Italy“. 

In a column earlier this week, Federico Fubini notes that, according to the Bank of International Settlements, in 2016 international banks reduced their exposure to Italy by 15%, or over $100bn, half of it in the last quarter of the year. The counterpart to this exposure reduction is the increase in the negative Target2 balance of Italy, which the ECB has already attributed to foreign investors selling into its asset purchase programs, and reinvesting the proceeds away from Italy. As a result of all this, Italy’s financial stability is increasingly dependent on the ECB.

The Capital Flight article by Federico Fubini is in Italian. Here is an unmodified snip from the article.

Distrust Widespread

Clearly, therefore, there is a conspiracy, but a widespread distrust of the direction being taken in the third euro area economy. Especially the banking system in Germany seems to have developed a deep-seated distrust. His exposure to the country late last year is worth little more than a quarter of that of the French banks, and now has dropped so much that is 30% below that that German institutions had on Italy at Euro 1999 debut. No other major banking system has implemented a retreat of these proportions, as if the integration of the single currency had never even begun.

The loss of one hundred billion dollars by large foreign banking investors would be a blow, not for purchases of Italian bonds by the European Central Bank. Throughout 2016 we continued at the rate of about ten billion Euros per month, on corporate bonds and especially on sovereign bonds. In fact the release of foreign banks is linked to the ECB intervention, because those have the opportunity to sell at the Institute of Frankfurt good part of their Roma government bonds. It is no coincidence if the public debt held abroad fell by 42 billion in just the first nine months of 2016, according to Bruegel. The irruption of the ECB in the market and the withdrawal of foreign banks are thus two sides of the same coin. The result is that the Italian financial stability is becoming more and more dependent on the support of an international institution, that next year will almost certainly cease.

I spoke about this process before in Target2 and Secret Bailouts: Will Germany be Forced Into a Fiscal Union with Rest of Eurozone.

One person I highly respect is adamant (or at least was) that rising Target2 does not represent capital flight.

But what else do you call it when foreign investors dump Italian bonds to ECB, the buyer of only resort

The Hunt for Taxes is Global


Hadrian-TaxRevolt

Trajan-Welfare-YouthTaxes are the root of all evil for this is the confrontation against the people that historically leads to civil unrest and then revolution. The American and French Revolutions were over taxes. Historically, even the Roman Empire was forced from time to time to grant tax amnesty as was the case in 119AD. You even have Roman Emperors such a Trajan (98-117AD) engaging in social legislation known as the Alimenta, which was a welfare program that helped orphans and poor children throughout Italy. The Alimenta provided general funds, food and subsidized education for children. The funding came from the Dacian War booty initially. When that ran out, it was funded by a combination of estate taxes and philanthropy.The state provided loans like Fannie Mae providing mortgages on Italian farms (fundi). The registered landowners in Italy received a lump sum from the imperial treasury. In return, the borrower was expected to pay yearly a given proportion of the loan to the maintenance of an Alimentary Fund – a kickback so to speak. Taxes and social programs have been a very long time.

Today, debts are never reduced. Consequently, governments only raise taxes continually. We see this is some of the richest countries in the world. Now Singapore is passing three amendments expanding the power of the Ministry of Finance (MOF) under the Property Tax Act. This new legislation is one that will hand the Inland Revenue Authority of Singapore (IRAS) more enforcement and investigative powers. Singapore government is using the law to force people to pay more in taxes. There will be no privacy. Under this legislation, the tax authorities will be able to summon people to appear personally before them and to provide all information. They will be interrogated orally for investigation be it their own taxes, or another person’s property/properties.

Governments are moving ever more closer to totalitarian states eliminating privacy and human rights. This is a global trend that will come to a head for governments will never reduce their costs and will always demand more and more taxes from the people until the bubble bursts.

Obamacare Finally Repealed


TAX CUT

The American Health Care Act (HR 1628) finally passed by the House yesterday reducing taxes on the American people by over $1 trillion. The bill abolishes the most abusive taxes taxes imposed by Obama and the Democrat party back in 2010 known as Obamacare. The Democrats helped the insurance companies and burdened the youth trying to force them to pay for insurance they did not need to get insurance companies to cover people they would not.

Obama as a presidential candidate back in 2008, had promised repeatedly that he would NOT raise any tax on any American earning less than $250,000 per year. That was an outright lie. As always, they claim they will only tax the rich, but it never end up that way.

Antonin ScaliaIn KING v. BURWELL, 576 US –  (2015), the Supreme Court upheld Obamacare claiming it was a tax. There was no constitutional power for Congress to punish someone who did not buy health insurance. The only way to uphold such a power was under the taxing powers. Justice Scalia wrote in his dessenting opinion:

The Act that Congresspassed provides that every individual “shall” maintain insurance or else pay a “penalty.” 26 U. S. C. §5000A. This Court, however, saw that the Commerce Clause does not authorize a federal mandate to buy health insurance. So it rewrote the mandate-cum-penalty as a tax.

With the repeal of Obamacare, tens of millions of middle income Americans will get tax relief from Obamacare’s long list of tax hikes that have oppressed so many. The taxes that will be abolished are:

  1. The Obamacare Individual Mandate Tax which hits 8 million Americans each year.
  2. The Obamacare Employer Mandate Tax. Together with repeal of the Individual Mandate Tax repeal this is a $270 billion tax cut.
  3. Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.
  4. Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.
  5. The Obamacare health insurance tax. This is a $145 billion tax cut.
  6. The Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.
  7. The Obamacare medical device tax. This is a $20 billion tax cut.
  8. The Obamacare tax on prescription medicine. This is a $28 billion tax cut.
  9. Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $6 billion tax cut.
  10. Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $20 billion tax cut.
  11. Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $126 billion tax cut.
  12. The Obamacare tax on retiree prescription drug coverage. This is a $2 billion tax cu

When There is no Justice – It is Time To Turnout the Lights


Just-us

QUESTION: Mr. Armstrong; I am a law student in London and have reviewed your case after going to the premier here in London of the Forecaster. My professor said your case was “stitched up” and is indicative of how corrupt the American judicial system has become. They ordered you to turn over assets, refused to ever define what those assets are to prevent any compliance, and then when the bank pleads guilty and agreed to return all the money, they simply said there was another fraud without ever charging you with anything. How can the American press simply refuse to ever tell the truth? Is this indicative of American justice?

BW

ANSWER: Sadly to say yes. The US government cannot be sued, only the agents of the government. Consequently, those in the Justice Department are not forthcoming about admitting a mistake. I do not believe that a prosecutor should be able to bring charges. There should be a panel set up where every prosecutor presents his case to them and they are the one’s who bring an indictment. That would remove the personal liabilities.

Wilson Edwin PaulEdwin Paul Wilson (1928 – 2012) was a former CIA and U.S. Naval Intelligence officer who was convicted in 1983 of illegally selling weapons to Libya. His daughter fought to get documents to prove he worked for the government uncovered. When one agency caught him, the CIA denied he worked for them. He was tried and convicted.

You can tell he was innocent because they kept him in solitary confinement – the ultimate torture. They did that to prevent him from having free communications outside the prison.

It was later found that the United States Department of Justice and the CIA had covered up evidence in the case. Wilson’s convictions were overturned in 2003 and he was freed the following year.

Wilson filed a civil suit against seven former federal prosecutors, two of whom are now federal judges, and a past executive director of the CIA. On March 29th, 2007, U.S. District Judge Lee Rosenthal dismissed his case on the grounds that all eight had immunity covering their actions.

The Supreme Court committed the the worst crime against humanity ever recorded demonstrating their bias. They declared that those who are prosecutors of judges have ABSOLUTE immunity from being prosecuted for wrongful prosecution even if they know they are abusing their authority because they might be afraid to prosecute someone if they could be prosecuted in return. The Supreme Court’s most anti-Constitutional decision ever rendered implemented a nationwide policy declaring prosecutors must have absolute immunity for acts committed in their prosecutorial role. This decision has unleashed the most abusive legal system ever on the face of this Earth. The most notorious court in history had been that of Hitler where it had a 90% conviction rate. That to the Supreme Court, you have been stripped of every possible human right since the dawn of civilization. The conviction rate now exceeds 98% in the US federal courts. Lawyers tell you to just plee because you cannot win. Nobody will hold prosecutors accountable and then most judges are former-prosecutors so good luck of pleading your case. There is not a vein of morality in these people. When you stare into their eyes, all you see is coldness of evil stripped of all human emotion. The Supreme Court has unleashed the total destruction of the Constitution and there is a growing call to acknowledge and address an epidemic of prosecutorial misconduct in the United States, but nobody will listen. The case was Imbler v. Pachtman and its perverse holding is uncivilized in any democratic state for it is the decision of a totalitarian regime.

Paul S AppelbaumThere is nothing you can do. There is so much corruption in the Justice System it is beyond belief. The ONLY reason I was released was because I had been accepted by the Supreme Court. To prevent them from ruling, the prosecutors had no choice but to release me. They had a dog and pony show. Dr Paul S. Appelbaum was put on the stand. He was the Forensic Psychiatry / Psychology from Columbia University. He testified that no time in contempt would alter my position. The Appeals Court recused Judge Owen and handed it to Judge Castel with the job of releasing me. Dr. Appelbaum testified my position was simple. The bankers wanted me silenced because their manipulations were failing after the collapse of Long Term Capital Management in 1998 and they blamed me for exposing what they we doing.

Appelbaum-CFTC Silence Me

Dr Appelbaum had to testify that there was no way I would comply and that civil contempt is coercive so if it lost its coerciveness then I had to legally be released. If you will not comply, then they have to release you. Someone had to say I would never comply in court in order to justify releasing me to prevent the Supreme Court from ruling. The real paradox is after I was released, the court had to rule I did not owe anything or else I would get a trial and I could start calling the bankers to the stand. They had no choice. How can you spend time in prison to turn over something for 7 years and then the court rules you do not owe anything? Anyone with common sense would ask what’s going on here? This was all about (1) having me turn over the code and (2) silencing me so the bankers could manipulate markets undisturbed.

Appelbaum Will Not Comply

When I did the premier for the Forecaster in Amsterdam, the third night was all the bankers in Europe. The moderator wanted to appear impartial and asked me what happened to the $1 billion that was supposed to be missing and nobody knew where it was. I turned to the audience and asked: Is it possible for $1 billion to be missing from a bank and nobody knows where it is? The audience all laughed. You either wire it out, write check, bust into the vault with a tank, or beam it out like in Star Trek. It was a totally ridiculous accusation and not a single member of the press even bothered to ask was that possible? How incompetent is that? It would be like reporting someone is standing trial for murdering his wife while she is present in the courtroom. The press always protected the establishment.

In an interview for the Forecaster, David Glovin of Bloomberg News at least spoke to the director of the film while the New York Times, Wall Street Journal, the New Yorker all refused to be interviewed:

DAVID GLOVIN: And there is a legal issue that develops in terms of whether or not Martin is…this is proper, that he can be held for so long, without being convicted of a crime.

Katrin: So is that a normal thing…?

DAVID GLOVIN: No! It’s totally, completely not normal. (15:12:13:10) Martin…in a white color federal case, Martin was held longer in prison, better known as civil contempt charges, then any one else.

Marcus: It didn’t reach you, that they were hiding the evidence. I think it didn’t even reach the public, because nobody is listening and this is what makes me so crazy, because nobody knows about it.

DAVID GLOVIN: I mean…I don’t know. I can’t answer about what other people did, I can’t answer what judges heard, what did I hear? I heard Martin and I wrote stories about him, I went to prison and I wrote here’s the guy, but again I would present the other side, because that’s what you do. That’s what we do, at least. They say X, they say Y, sometimes X may seem so outrageous and Y may not really hold water or etc. Yes…

(16:13:54:12)

I am by no means unique. Only a fool would believe what government says in any case. Take Bernie Madoff’s case and why did he plead guilty so fast? That was to shut down the investigation for he was protecting someone. The banks claimed they had no idea it was a fraud. Madoff was asked if the banks knew once he was in prison. He said of course. In fact, only a fool would believe the banks were not also involved. I was interviewed by a journalist at the NY Post. I was asked if the bank was laundering money in my accounts for the Russian Mafia and Colombian drug cartels “as they were doing in Madoff?” She knew the truth, but that interview was never published.

There is nothing to be proud of in the American legal system. Fair trials are simply IMPOSSIBL

March Trade Deficit Shrinks To Smallest Since October


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The US Trade Balance shrank to $43.7 billion in March, from an upward revised $43.8 billion in February, marking the month’s deficit the smallest since October and less than the conesnus estimate of $44.5 billion. Imports declined by $1.7 billion, or 0.7%, to $234.7 billion, while exports dipped fractionally more, or 0.9%, even as the recently weaker dollar did little to boost US exports. Notably, the US trade deficit with China was $31.4 billion, followed by the European Union at $10 billion. The trade deficit excluding petroleum stood at $35.82b in March.

The details: the deficit decreased in March 2017 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $43.8 billion in February (revised) to $43.7 billion in March, as imports decreased more than exports. The previously published February deficit was $43.6 billion. The goods deficit increased $0.4 billion in March to $65.5 billion. The services surplus increased $0.4 billion in March to $21.8 billion.

The March decrease in the goods and services deficit reflected an increase in the goods deficit of $0.4 billion to $65.5 billion and an increase in the services surplus of $0.4 billion to $21.8 billion.

Year-to-date, the goods and services deficit increased $9.4 billion, or 7.5 percent, from the same period in 2016. Exports increased $38.0 billion or 7.1 percent. Imports increased $47.5 billion or 7.1 percent

Exports

Exports of goods and services decreased $1.7 billion, or 0.9 percent, in March to $191.0 billion. Exports of goods decreased $2.1 billion and exports of services increased $0.4 billion.

  • The decrease in exports of goods mainly reflected decreases in industrial supplies and materials ($1.8 billion) and in automotive vehicles, parts, and engines ($0.9 billion). An increase in capital goods ($0.7 billion) partly offset the decreases.
  • The increase in exports of services mainly reflected increases in financial services ($0.1 billion) and in maintenance and repair services ($0.1 billion).

Imports

Imports of goods and services decreased $1.7 billion, or 0.7 percent, in March to $234.7 billion. Imports of goods decreased $1.7 billion and imports of services decreased less than $0.1 billion.

  • The decrease in imports of goods mostly reflected decreases in capital goods ($0.9 billion) and in industrial supplies and materials ($0.7 billion). An increase in automotive vehicles, parts, and engines ($1.1 billion) partly offset the decreases.
  • The decrease in imports of services mainly reflected a decrease in transport ($0.1 billion), which includes freight and port services and passenger fares.

Broken down geographically, the March figures show surpluses, in billions of dollars, with Hong Kong ($2.9), South and Central America ($2.6), Singapore ($0.5), United Kingdom ($0.5), and Brazil ($0.2). Deficits were recorded, in billions of dollars, with China ($31.4), European Union ($10.0), Mexico ($6.5), Japan ($6.5), Germany ($5.0), South Korea ($2.5), Italy ($2.1), Canada ($1.9), India ($1.7), OPEC ($1.6), Taiwan ($1.1), Saudi Arabia ($0.8), and France ($0.1).

  • The deficit with Japan increased $1.6 billion to $6.5 billion in March. Exports decreased $0.2billion to $5.3 billion and imports increased $1.4 billion to $11.8 billion.
  • The deficit with South Korea increased $0.6billion to $2.5 billion in March.Exports increased $0.1billion to $3.9 billion and imports increased $0.8 billion to $6.5 billion.
  • The deficit with France decreased $1.2 billion to $0.1 billion in March.Exports increased $0.6billion to $3.3 billion and imports decreased $0.6 billion to $3.5 billion.

While still a significant hole, the declining deficit trend will likely provide some satisfaction to president Trump; that said the US has a monumental task ahead of it if it wants to shrink the gap to zero.

 

The Euro & French Elections


IBEUUS-M 2-6-2017

QUESTION: Martin You said the turning point will be on monday 8th may. Could it be in connection with the result of the french election on may 7th? If it isMacron, the turning point will be up. If it is Le Pen, it will be down. Or?

Thanks. Regards.

 

ANSWER: The French media is portraying Macron as a centrist. It is expected that Macron should be able to attract a wider spectrum of second-round voters than Le Pen, pulling in left-leaning voters from Hamon and Mélenchon as well as those leaning to the right that voted Fillon in the first round. The polls put him at 65%.

Our computer projected that the “populist” vote would win.  Indeed, for the first time in modern French history, the runoff vote will not feature a single presidential candidate from a mainstream party. The Conservative and Socialists all lost.

The elite want Macron to win but this will be the nail in the coffin for the EU. Brussels will assume they defeated the “populist” simply if Le Pen loses. However, the mainstream parties all lost already. Macron will simply mean that Brussels will not reform and that suggests that we are looking at the collapse of the Euro moving forward into 2018. Our Yearly models have had three Directional Changes 2017 into 2019. Our Monthly Models have been targeting May 2017 for about one year.

Germany-France

A Macron victory should help the Euro hold for now. The key resistance stands in the 113-114 zone. The press will try to manipulate the people to save the EU. That is the agenda of the press in Europe, so they will cheer Macron and do their best to destroy Le Pen and in doing so, they are condemning the EU to utter failure. All they can see is keep the EU together even if that leads to internal civil war within Europe. The only thing holding the EU together is France and Germa

How Small Events Can Cascade into Contagions


 

COMMENT: Dear Martin Armstrong,

This very unusual video about dominoes is 2½ minute and shows how a small domino can knock over big ones. I remember you writing about a small Austrian bank, Creditanstalt, that in 1931 was the first sign of the economic depression. Maybe these dominoes can illustrate what happened.

I hope you are fine and thank you for this blog

L

REPLY: This is a great example of how a small event can set off a contagion. This is exactly how it works within the global economy

Changing Cycle Frequencies Produces Different Effects


1-ElectroMagnetic Wavelength

QUESTION: Marty, I’m glad that you’ve showed a couple of examples in the past few articles, as per how you apply ECM and volatility cycle waves to events. Yet, can you please explain the methodology and criteria which you use in deciding how to apply them?

What is the criteria with which you choose the starting date of any particular event? Why do you sometimes apply ECM 51.6 time-units, or 72 (volatility), or 31.4 (Pi), or at times intervals such as 2×8.6 vs 34.4, and so forth?
I do understand the arithmetic and the individual cycles, yet I want to understand how your mind combines the right frequencies and adopts the correct cyclical pattern for analysis. In few words, what is the methodology.

Thanks in advance for everything you’re doing.

SB
Wave-Shape
ANSWER: Cycles are identical to light, which always moves in frequencies. Everything within the universe is fractal. So discovering the key then applies in all frames of reference. It is way too complex to answer in a brief note. I promise, I am trying very hard to complete the Geometry of Time. It will take a lot of pages to explain this complex and deep subject.
Nevertheless, with a light wave, alter the frequency length and you get a different effect. Major turning points are the convergence of many cycle frequencies. Each will depart from that same event producing different effects and events in the future. It is all about understanding each wave and what it will produce like radio waves, microwaves, infrared, visible light, ultraviolet, x-rays, and gamma waves. They are all part of the light wave. Change the frequency and you can watch TV or cook din

Mainstream Media is the Third Horseman of Economic Apocalypse


Washington Post - Logo - 1

COMMENT: Martin,

OK, so I don’t follow major media at all.  However, there was a link to a story from the Washington Post on Google.  Silly me–I followed it.  There, in white letters on a black background was the WP’s logo and motto:  “Democracy dies in darkness”.

And there you have it:  They told the truth, but not in the way they wanted.  Their lies and corruption are the darkness that kills democracy.

-DB

PulitzerHearstWarYellowKids

REPLY: It is very sad, but they are doing what history always shows happens. The press champions self-interest. They created the Spanish American war with fake news about the sinking of the Maine in the Spanish harbor. The Pulitzer Prize was created because he made so much money starting that war becoming the father of Yellow Journalism, he donated his money to Columbia University to clean up his reputation after he died. Any journalists are proud to win the Pulitzer Prize named for the very guy who championed fake news.

Four Horsemen-Apocalypse

When the news turns to propaganda, it is one of the last things to take place in the historical sequence of how civilization falls. The mainstream media is the third horseman of economic Apocalypse – Taxes – Corruption  (Politics/Rule of Law) – Propaganda – War.

*(First you have the taxes, then comes the corruption to bribe politicians to get out of the taxes and they use the courts to extract taxes, then comes the propaganda of the media to manipulate society to hold on to power, and then finally comes the war (civil unrest/international)

Poland – The Next Crisis for the EU – Independent Sovereignty is the Issue


warsaw-2

 

GDP World Bank 2016Poland represents a major threat to the EU. The entire idea of the EU was the propaganda that Member States would successively grow into a real Union through a longer integration process. GDP was supposed to grow, not decline, and the threat of war would vanish by surrendering sovereignty to Brussels. In reality, the exact opposite has unfolded. GDP has progressively declined and the risk of a European war has been increased with the idea of surrendering sovereignty to Brussels.

Throughout Europe, there is a growing “populist” movement especially ignited with the attempt to force member states to accept refugees when this was an unilateral decision exclusive made by Merkel to save her public image after being hard on Greece.

British GDP Growth since 1949

Even the data from the British Government clearly shows how their GDP has declined ever since joining the EU in 1973. Obviously, the exact opposite trend determines reality – not political propaganda. The movements that promotes the sovereignty of the national states and demand a weakening of the central institutions are on the rise all over Europe. This is what Brussels calls the “populist” movement.

Poland is questioning the current situation of the EU in its current form and is not finding it agreeable especially when it goes against their religious foundation. Many are alarmed because there were more Mosques built in Britain during 2016 than churches. Churches are on the decline and even synagogues are being converted to Mosques.

Poland is the largest beneficiary of EU payments receiving an annual net of just €10 billion. Nevertheless, Poland represents a huge risk to the EU for the independence and sovereignty of Poland has become a top priority in the face of forced refugees. Poland is actually more linked to the USA and Britain than to Brussels.