Italy v EU – November 21, 2018 | Armstrong Economics

The event today may be the fact that the EU has now stated it will bring sanctions against Italy for refusing to comply with its demands. So here we have the Pi Target and to the day Brussels has officially rejected Italy’s spending budget on Wednesday, November 21st which opens the door to sanctions. With hindsight, we will perhaps look at this day as the start of a further deterioration of the European Union that has converted a trade union into a centralized dictatorship applying a central theme of austerity to everyone regardless of their economic conditions.
— Read on www.armstrongeconomics.com/armstrongeconomics101/ecm-armstrongeconomics101/italy-v-eu-november-21-2018/

The Fate of Germany v Euro – The Export Economic Model Risks | Armstrong Economics

QUESTION: Mr. Armstrong; I watched the new documentary on your solution. I really want to thank you for everything you do and for free. It is so nice to see someone who actually gives back and has no personal agenda to enrich themselves. My question is this. You mentioned the reason why the United States economy was the envy of the world and differentiated it from Germany which has an export model economy that is why they supported the euro, to begin with. What do you see for Germany ahead? Thank you CB ANSWER: Germany has an export-dependent economy which has directly benefited from the continent-wide trade liberalization and the creation of the Euro which eliminated foreign exchange fluctuations for German manufacturers in Europe at least. However, that simply means that Germany also has the most to lose from a worsening Euro crisis and a resulting wave of Euroscepticism. The political freedoms lost with the creation of the Euro will tear Europe apart. The refusal to consolidate the debt within Europe was profound. The Italy Crisis demonstrates what I have been warning about. BECAUSE there is no central debt, Brussels sticks its nose into every budget of every member state. The economic conditions within Europe are different between each member. Germany is an export economy and Greece is a tourist economy. There are great differences between each member so one policy does not fit all. They are trying to PRETEND they are creating the United States of Europe but that is a joke. The refusal to have consolidated the debts created an unsustainable political union. The USA has a federal debt and budget. Washington does not stick its nose into the budgets of all 50 states. They issue their own debt which is NOT ACCEPTABLE for reserves of any bank. They are also all on their own paying different rates of interest according to their credit rating. In the EU, they are trying to manage the budgets of every member which will only lead to political differences. The structure is absurd and then the banks have to be politically correct and hold the debt of all member states. Thus, the risk becomes if one member is in a crisis, they bring down the entire system. In the USA, if Illinois goes bankrupt, it has no impact on the dollar, the national debt, or politics in Washington. The greatest risk to Germany is the collapse of the Euro means that the single currency relieved their manufacturers of having to manage currency risk. Suddenly, the currency risk returns, the export model fails, and the lack of a domestic consumer market means that the economic conditions in Germany decline rapidly because of their dependence upon everyone else doing well.
— Read on www.armstrongeconomics.com/markets-by-sector/foreign-exchange/euro/the-fate-of-germany-v-euro-the-export-economic-model-risks/

Life in the EU

Italy Sends it Budget to Brussels | Armstrong Economics

The Italian Government has gone and adopted the controversial draft budget for the coming financial year. Prime Minister Giuseppe Conte said that the budget plan would keep the government’s promises, and keep the public finances in order. The government has now forwarded the draft to the EU Commission in Brussels for consideration. This is where we will see the clash of cultures between the people and austerity that focuses on the debt holders – not the people. What is unique in this budget is the introduction of a basic income for the poor, an earlier retirement age promised during the elections, and tax relief for the self-employed. The losers will be the Banks who lose tax breaks. In order to finance these costly campaign promises, the government plans a significantly higher level of new debt in 2019 than had been promised by the previous government. Therein lies the clash with Brussels as Italy embarks on a confrontation course with the EU. Under the EU rules, the upper limit for the debt ratio of no more than 60% GDP is the criteria set by austerity. Italy is already sitting on a debt of more than 130%. Only Greece comes in the Eurozone on an even high percentage ratio. Economy Minister Giuseppe Tria made a public statement that he was confident that he could explain the budget to the European Commission. Italy must increase its spending to get the economy off the ground. The deficit target of 2.4% of GDP is “normal”. He has publicly stated that the “idea that this budget could blow up Europe is completely unfounded.” The economic guidelines of austerity are completely unreasonable. In joining the Eurozone, the German debt converted with no appreciable impact. In southern Europe, converting their past debts to Euro doubled their “real” past debt obligations. Previously, their currencies naturally depreciated ensuring that debt repayment was always with cheap currencies. Under the Euro scheme, the rise in the Euro from 80 cents to $1.60 imposed a tremendous deflationary wave upon southern Europe from which the damage has been inescapable.
— Read on www.armstrongeconomics.com/international-news/europes-current-economy/italy-sends-it-budget-to-brussels/