In much of the world, small countries are hoping to retain their independence, whilst portions of larger countries are trying to establish their independence. Understandably, they're meeting with resistance, as it's usually the areas that are the net-contributors to the larger economy that seek independence, whilst the areas that are the net-recipients wish to take the conglomerate approach (and to continue to eat their neighbour's lunch). This is evident even in the US, where those states that are net-contributors are experiencing the same frustration as Venetians and are making noises about secession. And, although no major changes have taken place recently, early rumblings can be heard all over the world.
With all eyes focused on Eastern Europe, tensions appear to be quickly mounting between the erstwhile allies North Korea and China.
Among the key overnight events was the February Euro area unemployment report, which was unchanged at 11.9%, lower than the 12% median estimate; in Italy it rose to a record 13% while in Germany the locally defined jobless rate for March stayed at the lowest in at least two decades Euro zone PMI held at 53 in February, unchanged from January and matching median estimate in a Bloomberg survey HSBC/Markit’s China PMI fell to 48 in March, the lowest reading since July, from 48.5 in February; a separate PMI from the government, with a larger sample size, was at 50.3 from 50.2 the previous month NATO foreign ministers meet today to discuss their next steps after Putin began withdrawing forces stationed on Ukraine’s border Gazprom raised prices for Ukraine 44% after a discount deal expired, heaping financial pressure on the government in Kiev as it negotiates international bailouts.
South Korea stands out as a buying opportunity amid the indiscriminate emerging markets sell-off.
When one studies history, all events seem to revolve around the applications and degenerations of war. Great feats of human understanding, realization and enlightenment barely register in the mental footnotes of the average person. War is what we remember, idealize and aggrandize, which is why war is the tool most often exploited by oligarchy to distract the masses while it centralizes power. With the exception of a few revolutions, most wars are instigated and controlled by financial elites, manipulating governments on both sides of the game to produce a preconceived result. Every major international crisis for the past century or more has ended with an even greater consolidation of world power into the hands of the few, and this is no accident.
All signs suggest that North Korea is laying the groundwork to begin a new round of provocations. Despite its deliberate (and successful, in the U.S. at least) attempts to portray itself as an irrational actor, North Korea’s provocations usually follow a well-worn playbook. North Korea has carefully put all these pieces into place over the past few weeks.
Further protests and a plethora of headlines this morning from both sides in the troubled European (for now) nation. The Ukrainian foreign minister begins by noting that "its impossible to take Ukraine away from Russia," that Ukraine was "right to take attractive Russia offer," and that protests aren't peaceful. Opposition leader Klitschko responded that "Ukrainians dream of a stable, modern country," and that a majority of Ukrainians want "European values," and asks for "international help." Romania's Basescu is concerned and urges the Ukrainian army to stay out of the conflict. But, as Martin Armstrong notes below, according to a former adviser to Vladimir Putin, the economist Andrei Illarionov, the Kremlin will take one of three possible scenarios with respect to the Ukraine problem to "assert a lot of pressure on Kiev."
Following the deaths of three protesters (two from gunshot wounds) after the government crackdown overnight instigated by the increasingly hard-line President Yanuckovich, the streets are becoming markedly more tense and violent. The uprising in Ukraine is not simply one of a youthful population dismayed at not joining Europe. Similar in vein to Thailand's protests, Ukrainians have become disgusted with the corruption in government (and increasingly enraged at Yanuckovich's repressive laws against the protesters). As Martin Armstrong warned recently, "welcome the ticking clock measuring how little time we have until this whole things just goes bust." As the following images of the war-torn-looking streets of Ukraine show, perhaps that clock is closer than many think...
A report by Bruce Bennett and the RAND Corporation has brought attention to one of the most important issues for international politics. Ironically, despite being a region of vital interest within American foreign policy, there has been very little public discussion of what to do in the event of government collapse in North Korea. Bennett’s timely report provides a series of vital contributions to the discussion and further outlines the lack of preparation in political, social, economic and military terms. Yet beyond the critical end game for the Korean peninsula are deeper questions concerning how any international force might respond. Specifically, how can the U.S. and Republic of Korea effectively mobilize regional powers with their differing security and development goals? Preparing for the unthinkable is not a simple moral imperative, but responsible leadership in the twenty-first century.
Only a week ago, the consensus among most mainstream economic analysts and even some alternative analysts was that a government shutdown was not going to happen. The Republicans would fold in the shadow of President Barack Obama’s overwhelming drive for socialization, spending would continue to grow unabated, and the debt ceiling would be vaulted yet again to feed the bureaucratic machine with more fiat. Today, there is no consensus, very few people continue to be so blithely self-assured and even the mainstream is beginning to wonder if a much bigger game is afoot here.
The situation in Italy appears to be going from bad to worse. With a confidence vote pending for Tuesday as the government dissolves into chaos for the umpteenth time, and following the resignation of the CEO of one of Italy's largest non-financial corporations (Telecom Italia), the largest bank (by assets) in Italy - Intesa SanPaolo has announced - effective immediately - the resignation of its CEO and replacement with Carlo Messina. According to sources, the now former CEO had lost the confidence of shareholders (which is odd given the bank's stock is near 2-year highs). We can't help but wonder Ayn Rand-like at the devolution of the ruling class in Italy and what happens next (in light of the crumbling manufacturing and production data).
Italy’s Stability Program targets a 5%-6% primary budget surplus, and 3% nominal GDP growth. Both strike JPMorgan's Michael Cembalest as unrealistic in the context of post-crisis Italy. Italy ran a 6% surplus for a brief moment in the 1990’s but it didn’t last, as it was the result of a prior devaluation helping growth, some asset sales and some tax increases. Only asset sales seem feasible in Italy right now, if anything. If Cembalest's concerns are correct, Italy will remain a country with almost twice the debt/GDP ratio as the US; unbreakable interdependency of the government, the banks, and the ECB; and low GDP and employment growth. If history is any guide, he will be right as the last few years have seen the biggest collapse in Italian GDP since The Unification in 1861...
The high priests of academic and “official” history love a good villain for two reasons: First, because good official villains make the struggles and accomplishments of good official heroes even more awe-inspiring. And, second, because nothing teaches (or propagandizes) the masses more thoroughly than the social or political lessons inherent in the documented rise and fall of the world's most despicable inhabitants. We get shivers of fear and excitement when we discuss the evils and the follies of ancient monsters like Nero, Attila the Hun, Caligula, etc, or more modern monsters, like Mussolini, Stalin Hitler, Goebbels, Mao, Pol Pot, Idi Amin, and so on. We take solace in the idea that “we are nothing like them”, and our nation has “moved beyond” such animalistic behavior.
There are dates that go down in history and some will be remembered as landmark signals of changing times. Russia has the upper hand in Syria.
The lack of a centralized constitutional and monetary union has led to several years of inaction in the process of unification of the Euro-zone. While it was a "grand experiement" to run the Euro-zone under a single currency the underlying structure to make it effective long term was never achieved. There are currently many promises that have been made to the financial system by the ECB. The question is whether or not they can ultimately "cash the check." While we do not have certain answers as to the where, the who or the when - we are fairly confident that it will be sooner than many currently imagine. We do believe that the ECB will be able to skirt by the ratification of the ESM this coming week and get some limited funding into place, however, we still believe the bigger problem comes at the end of summer when the German voters begin to voice their concerns - after all it is their money that is being wasted.