EUCOM Economic Analysis - Part I

[Firn]

Let's get real about the stock market puts all the recent records in perspective. For non-economists the 'real' is a play on the important adjustment for inflation.



He also uses the Graham/Shiller P/E to put the price in context of the (past) long-term earnings. It is one of relative few metrics I value for a few reasons I have outlined in the past. For obious reasons he will tend in the long run to hover above the current P/E...



Buffett pretty much said the same thing last week underlining especially the part about the retained earnings. So should you invest now in stocks? Just like pretty much everbody else I have no idea. I will continue to sell bonds and have not bought a new one in the last 3 years or so. Too much risk IMHO as someday you will have higher yields and thus in the long run bond prices will come down. Hopefully we won't all be dead...

I enjoyed this post about why old hedge fund managers hate Ben Bernanke. Luckily I did change my views on inflation within a liquidity trap, after having faced the facts. I would be quite a bit poorer today and have much less faith in ordinary macro textbooks...

Hedge funds are doing badly in this rising-tide-lifts-all-boats market, and they feel that they would be outperforming if the Fed just let things collapse, and they could swoop in when prices "clear."

The inflation and hyperinflation fantasies are another important aspect here. A lot of these guys cut their teeth during the 80s, when inflation was the enemy, and Volcker was a hero for fighting it. Thus being anti-inflation is kind of a nostalgia trip for them. Also in general, the older people are, the more worried they are about inflation. Also the older people are, the more they are inclined to invest in bonds and risk-free assets, so low rates aren't fun.

[Firn]

Time travel in Euroland

Unfortunately, this is not news by now, but the president of the Euro group, Jeroen Dijsselbloem in an interview with CNBC yesterday dismissed the role that fiscal policy and monetary policy can have to address the economic crisis (emphasis is mine):

"Monetary policy can really not help us out of the crisis. It can take away the pressure, it can accommodate new growth, but what we really need in all countries is structural reforms in the first place. I'd just like to stress the point that in the policy mix of fiscal policy, monetary policy and structural reforms — I'd like the order to be exactly the other way around. Structural reforms in the first place, fiscal policy and viable targets in the mid-term for all regions in second place — and monetary policy can only accommodate domestic economic problems in the short-term."

The bloggers respond:

It is not exactly clear what to make out of his statement but it seems that long-term solutions should come first before we implement those that will help us in the short term. It is surprising that even today there is such a great confusion about long-term versus cyclical problems.

This confusion comes from a basic belief that some hold that there is nothing inherently different in the dynamics of an economy when one looks at the short run and the long run. This is part of a never-ending academic debate but when it comes to policy makers and politicians it seems to be more a matter of beliefs.

What it is not always understood is that we are dealing with two separate problems and therefore we need two different set of tools or solutions to deal with them.

I fully agree with their point of view. Right now the ECB is in life-saving mode and tries to keep the patient afloat. The governments should act quickly and pump into him the needed medicaments and other proper treatments including expensive surgery. There is now little sense to force him to undergo and even light training to get into good shape and to shed some weight. The latter is an excellent approach for the long term but in the short run it might lead to an exitus.

Of course some political actors seem to fear that good fiscal treatment will ease the way for dolce vita and not harsh austerity, with an adios to structural reforms.

[Firn]

Why oh why are we so poor ...

Oder sind die Deutschen reicher als gedacht, weil sie so eine grozgige Rente bekommen, wie Angela Merkel behauptete? ltere Untersuchungen zeigen, dass die Rentensysteme von Italien oder Spanien mindestens genauso grozgig sind wie die deutschen. Und: Wenn die Deutschen sich auf ihre Rente verlieen, dann wrden sie weniger sparen. Tatschlich aber spart kaum jemand mehr als die Deutschen. Von ihrem hohen Einkommen legen sie seit Jahren jedes Jahr mehr als ein Zehntel zurck.

Doch aus den Daten von De Bonis und seinen Kollegen ergibt sich eine andere Antwort auf die Frage, wo das Geld der Deutschen bleibt. Ihre Linien zeichnen ein Bild von einer Nation, die spart wie verrckt, aber ihr Geld vollkommen falsch anlegt. Aus lauter Angst um das kostbare Ersparte stecken die Deutschen ihr Geld in Anlageformen, die als sicher gelten aber auf Dauer viel zu wenig Geld bringen.

I think there is quite some truth in that. It is especially strange since the German economy offers a great deal of great businesses which are active all over the world. So even a simple ETF on the DAX offers a fine globalized and diversified investment opportunity.

Da ist zum Beispiel das allseits beliebte Tagesgeldkonto: Fast die Hlfte des deutschen Finanzvermgens liegt in Einlagenkonten. Dort geht selten etwas verloren, aber die Rendite ist mickrig. Das eine Prozent, das Direktbanken im Moment zahlen, gleicht nicht mal die Inflation aus.

Instead of owning a part of the business you lend your money away very cheaply.

Auch die Liebe der Deutschen zu ihrer Lebensversicherung findet sich in der Studie wieder: Versicherungsansprche machen in Deutschland ein Drittel des Finanzvermgens aus. Auch die sind aber eher schlecht verzinst.

Der Lohn des Ganzen: Die Deutschen sind zusammen mit den Franzosen und den Japanern die Einzigen, die im Jahr 2011 schon wieder ihre Verluste aus der New-Economy-Krise ausgeglichen hatten. Aber sie hatten eben schon vor der New Economy kaum Vermgen. In den Lndern, in denen die Menschen mehr Geld in Aktien und Immobilien investieren, waren zwar die Verluste grer aber das Gesamtvermgen war trotzdem deutlich hher, weil die Menschen vorher mehr verdient hatten.

De Bonis und seine Kollegen zeigen: Die Deutschen sparen zwar viel. Aber was den Zins angeht, gehren sie seit den spten neunziger Jahren fast jedes Jahr zu den Schlusslichtern. Das macht die ganze groe Ersparnis zunichte. Und die Deutschen arm.

That is actually rather tragic. The positive impact on the capital costs for German business is certainly small compared to the loss in long-term wealth. Capital allocation matters greatly indeed.

Lanxess is one of the relative few big German stocks which looks really attractive. I actually enjoy reading annual reports, knowing well how companies tend do dress their windows but usually you always find out interesting stuff. I will have to dig deeper, time permitting.

[Firn]

The wrong advisers - where are the economists?

One of the most interesting articles I have read this year. It is about the lack of economists within the circle of power of the German government.

Wahrscheinlich, weil niemand genau zugehrt hat. Die Regierung tue gut daran, den Empfehlungen der konomen mit "kritischer Distanz" zu begegnen, sagte Merkel. Und berhaupt gebe es hufig "unterschiedliche Begutachtungen des gleichen realen Sachverhalts".

Die Wahrheit ist: Nie zuvor war der Graben zwischen Politik und konomie tiefer. Prominente Wirtschaftsprofessoren haben sich zusammengeschlossen, um mit der neu gegrndeten "Alternative fr Deutschland" die etablieren Parteien herauszufordern. Und in den Fhrungsetagen der wichtigen Ministerien gibt es praktisch keine konomen mehr.

Was sagt es ber die Politik aus, wenn das Land in einer der grten Wirtschaftskrisen aller Zeiten ohne Wirtschaftsexperten regiert wird? Und was sagt es ber die konomie aus, wenn es den Deutschen doch zugleich so gut geht wie lange nicht mehr?

It is actually quite amazing. Now I'm used from Italy that the various avvocati dominate parliament&Co but I was really surprised just how marginal economists are currently within the political elite of Germany.

Possibly this is indeed one of the reasons why Germany acts like it does. It always felt to me that there the current government has a big fear of getting played for a fool by other countries. To fight the moral hazard and the bad breaking of rules, strict treaties get written with many hefty strings attached. In short you get the money but only with that sine qua non and if you do not fullfill this contract you have to suffer this and that punishment. It is all fully understandable from a lawyers point of view and to a good amount necessary even from a purely technical point of view but it is not always good economic sense. And that one seems to lack greatly.

Die Politik dagegen ist in einer Zeit, in der weitreichende Entscheidungen getroffen werden mssen, mehr denn je auf Orientierung angewiesen. Und die knnen die Wirtschaftswissenschaftler immer weniger bieten. Schuble erzhlt gerne, dass amerikanische konomen rieten, weniger zu sparen, whrend deutsche Experten ihm das Gegenteil nahelegten.

Also geben in der Regierung Juristen den Ton an. Das prgt die deutsche Sicht auf die Krise. Fr Merkels Berater steckt Europa in der Klemme, weil bestehende Vertrge nicht eingehalten wurden. Und so tfteln sie an immer neuen Vertrgen, die schwerer zu umgehen sein sollen. Der Fiskalpakt fr die Begrenzung der Staatsschulden ist bereits verabschiedet, derzeit wird ein Abkommen fr Strukturreformen ausgearbeitet. Dahinter steht der Glaube, dass sich die Welt mit Rechtsakten ordnen lsst und die Wirtschaft floriert, wenn die Guten belohnt und die Bsen bestraft werden.

Fr die meisten konomen hingegen ist die Krise allen Meinungsverschiedenheiten zum Trotz nicht das Ergebnis individuellen Fehlverhaltens, sondern systemischer Natur. Sie sei darauf zurckzufhren, dass durch die Einfhrung der gemeinsamen Whrung zu viel Kapital vom Norden in den Sden Europas geleitet wurde. Wer die Guten sind und wer die Bsen die Haushalte im Sden, die das billige Geld ausgegeben haben oder die Sparer aus dem Norden, die es ihnen zur Verfgung stellten , ist dann nicht mehr so klar.

At last:



Good and bad times indeed. for some private wealth + for the state of many countries and many people.

At the last end:

These 31 charts will destroy your faith in humanity, I used to argue with some of them.

[Firn]

Quite a setback on the equity markets, with Asia leading the way in reaction to the European crisis and the monetary race to the bottom which however might or might not end despite good economic reasons but strong political pressure which is caused by raging inflation which is at historic lows for a couple of years....

To keep it simple. The U.S economy looks quite bad for labour, far better for shareholders or the 'rich' but overall vastly superior to many European ones in which austerity whips dying horses closer to the happy hunting grounds. Japan has done rather well thanks to brave Abenomics which obviously wants higher inflation expectations and takes gladly a weaker yen. China is still growing strong, even if 'just' under 8% and in India and Brazil and quite a few other developing countries the consumers are consuming more and more. The world economy should grow over 2% and that despite the drag of recession big Europe.

All in all bonds still look deadly, money is a sure loss in purchasing power and I got housing pretty well covered. So stocks it is and it will remain this way for quite some time. The dividends after tax are beating the inflation pretty handily. Today I invested into a MSCI China ETF and Lanxess. I'm pretty sure that both will give me good returns over 5 years.

The Chinese are slowly tackling the problems on their equity markets, hopefully the big heads of the party understand the need to solve those problems. Right now so much money flows into housing that and additional basin would be highly welcomed. Overall I have considerable faith into the average Chinese guy trying to do well.

[Firn]

Italian 10Y bond yields, see the European Mark effect kick in:



Germany obviously kept it's own currency. 10 more years are covered in the graph.



As did the UK:



Last but not least, the big boy of capitalism:



Despite printing and printing and printing and all the funny names the yields are incredibly low. A nod to good old Keynes. If the money starts indeed to flow away from bonds, I'm waiting for it as a new fellow shareholder in equities.

[davidbfpo]

A Greek-American economist's Q&A:

...discusses the disastrous outcomes of the policies enforced on Greece by its international lenders, and the IMF’s admission that it made serious errors in its assessment of the impact of austerity on the Greek economy and society.

Link:http://www.opendemocracy.net/openeco...ssible-way-out

Advocating an EU-funded Marshall-type recovery programme is IMHO lacking realism, let alone how Germany would react.

[Firn]

A Greek-American economist's Q&A:

Link:http://www.opendemocracy.net/openeco...ssible-way-out

Advocating an EU-funded Marshall-type recovery programme is IMHO lacking realism, let alone how Germany would react.

Nothing new, the European core does still preach austerity, even for the own population and it is highly unlikely to see much additional help flowing into a desolate country with a terrible political caste. The core could do a lot more to raise the own costs compared to South and profit of the incredibly low yields in the bond markets to invest into the own country. Lately there have been some highly critical articles about the infrastructure of Germany, so why does the governments not lend for basically free and do something about it?

Italy or Spain are, despite all their specific problems, no Greece, with all due respect to the Hellenic state. Still the austerity does inflict amazing amounts of pain and will drive the public debt higher and higher. Rather obvious, considering the erosion of the tax base.

[Firn]

The German DAX hit today a record high, a good run indeed for most shareholder. The funny thing is how predictable sometimes the long term is while the short term can be extremely confusing. Obviously the record is not a real record as it is not real, not inflation-adjusted.

All in all not much changed, but equity became a bit more risky, bonds a bit less deadly. Clearly it is still safer to stay long-term in the former with liquidity getting more attractive.

The Fed did the right thing, I guess to support an economy in which the job market is still bad.

[Firn]

Well the DAX hit a new record today and it all feels a bit strange. One week ago I started to disinvest and I continued it so that I could reduce my stock % which has been almost 95%. The reasons have been mentioned in the last years in this thread, bonds have been terrible and selling them over the last two years has proven to be an excellent decision.

Stocks have become far less cheap over the last two years and I had recently had a hard time to find really attractive as I glanced over a couple of candidates I filter with good old Grahams help. In addition to that we have seen that a couple of fringe players were able to imperil the credit of the USA, something I found rather unbelievable some years ago. It is quite a sad story, at least the FED got a chief able to soften the political blow somewhat. It is no good sign that one has to put his faith into the central bankers to work monetary miracles to limit the danger too many politicians are doing to their own people....

P.S: The Nobel for Fama, Hansen and Shiller has caused a bit of stir.

Personally I think that Fama deserves credit for forcefully creating a pure ideal which has much truth in it. Shilller put with great success great effort into showing that financial markets 'only' tend to be efficient to differing degrees depending on various circumstances. Personally I'm an avid reader of Shiller which still offers neat new insights while Fama mostly lives from his fama of earlier days. A very deserved one, I might add.

P.P.S: In SWC terms both togheter do a repeat of Clausewitzs mighty first chapter of Vom Kriege.

[Firn]

Mark Thoma gives a -obviously - better example about the recent prizes:

Are Rationality and the Efficient Markets Hypothesis Useful?

Just a quick note on the efficient markets hypothesis, rationality, and all that. I view these as important contributions not because they are accurate descriptions of the world (though they may come close in some cases), but rather because they give us an important benchmark to measure departures from an ideal world. It's somewhat like studying the effects of gravity in an idealized system with no wind, etc. -- in a vacuum -- as a first step. If people say, yes, but it's always windy here, then we can account for those effects (though if we are dropping 100 pound weighs from 10 feet accounting for wind may not matter much, but if we are dropping something light from a much higher distance then we would need to incorporate these forces). Same for the efficient markets hypothesis and rationality. If people say, if effect, but it's always windy here -- those models miss important behavioral effects, e.g., -- then the models need to be amended appropriately (though, like dropping heavy weights short distances in the wind, some markets may act close enough to idealized conditions to allow these models to be used). We have not done enough to amend models to account for departures from the ideal, but that doesn't mean the ideal models aren't useful benchmarks.

Anyway, just a quick thought...

[Firn]

From petty talk about stocks to one of the important developments in Italy after the war, in the South the deaths outnumber the births. In the Mezzogiornos often tormented history this happened only twice in peacetime: 1867 after the Italian unity and in the grip of the Spanish fever.

Desertificazione del Sud: I morti superano i nati - Cos solo dopo l?Unit e durante la Spagnola.

C' da rimanere impietriti a guardare in quali condizioni versa il Sud. Il lavoro una chimera, la povert aumenta vertiginosamente, i giovani scappano, il divario con il resto del Paese diventa abisso. Per non parlare del macigno della criminalit. L'ultimo rapporto del centro studi sull' economia meridionale Svimez ci consegna uno scenario angosciante, nel quale avanza soltanto una cosa: la desertificazione. Industriale, economica, ambientale. Perfino umana: nel 2012 il numero dei morti ha superato quello dei nati vivi. Nella storia del Mezzogiorno d'Italia era accaduto soltanto due volte: nel 1867, pochi anni dopo l'unit, e nel 1918, anno dell'epidemia di spagnola. Un dato che segnala le proporzioni di un dramma destinato ad assumere proporzioni enormi, considerando che anche la fecondit femminile ha subito una preoccupante battuta d'arresto. Non si fanno pi figli: 1,35 per ogni donna al Sud, 1,43 al Centro-Nord. Il rapporto Svimez ci dice che il ritmo dell'emigrazione ormai costante. L'anno scorso sono scappati dalle Regioni meridionali in 112 mila. Negli ultimi vent'anni hanno definitivamente lasciato il Sud 2 milioni 700 mila persone. Fuggono i giovani, che sono il 70 per cento di chi emigra, fuggono le donne, che sono il 50 per cento, fuggono i laureati, che sono il 25 per cento.

Interestingly the 'esodo' was not higher then the mean during the last 20 years, however the lower birth rates have taken their toll and there is just a smaller pool of people which tend to emigrate. Most of them are between 20 and 40 with a peak around 30. While in the past the Mezzogiorno could replace it's migration losses with it's fertility, however times have changed greatly and in the last decade the Southern population has just remained stable with a big grey shift. In highly likely indeed that it will shrink a very considerable amount in the next decades.

The macroeconomic data coming from this report is bad for Italy as a whole but downright depressing when looking at the South. It does not make for happy reading.

Here you can read the Italian summary, there is no English version.

P.S: I just wanted to add something to avoid getting misunderstood. It is good that people with pretty low chances to get a half-away decent job are mobile and go to find work where there is more. I wrote about that a couple of times in this thread and in addition still think that public spending has a considerably higher multiplier in the North. Sadly the exodus is a reaction to the terrible state of the South, Italian depression or not, which only has become (much) worse in the last five years.

[Firn]

This thread has certainly gone quiet without the imput of other guys. Maybe most are just too tired about the economic mess in which large parts of Europe are still in.

The swiss Masseneinwanderungsinitiative has caused quite some reactions within and across Europe. It was very close indeed, caught many big players in the industry and politics by surprise and will cause the Switzerland very considerable issues. The EU and neighbours are certainly not amused and even if the will of 50,x of the voters will get respected it will have consequences.

The relative liberal and economy-focused NZZ has analyzed the voting patterns, the reaction and the possible consequences. Needless to say that there are quite a few paradoxes:

Die Skepsis der Bevlkerung gegenber der Zuwanderung ist nicht dort am grssten, wo sie am strksten sprbar ist. Kantone mit einem Auslnderanteil, der unter dem nationalen Schnitt liegt, haben nmlich der Masseneinwanderungsinitiative der SVP zugestimmt. Aus diesem Muster fallen nur die Kantone Tessin und Schaffhausen, die trotz berdurchschnittlicher Auslnderquote im Ja-Lager sind. Vor allem im Tessin ist der durch die Grenzgnger aus Italien ausgelste Druck gross. Der Ausreisser auf der anderen Seite ist der Kanton Jura, der die Initiative bei vergleichsweise wenigen Auslndern ablehnt.

Eine hnlich paradoxe Situation zeigt sich beim vieldiskutierten Dichtestress. Dieser msste in grossen Stdten und in Regionen mit hohen Wachstumsraten (Bevlkerung, Bruttoinlandprodukt) am strksten wahrnehmbar sein. Doch eine von der Firma Microgis aufbereitete Grafik zeigt eindrcklich, wie vorab in der Deutschschweiz die Ablehnung der Initiative mit dem Grad der Urbanisierung steigt. Je mehr Menschen auf engem Raum leben, desto geringer fiel also die Zustimmung aus. Ausnahmen bilden auch hier die Kantone Tessin und Schaffhausen. Erstaunlich auch, dass die Diskussionen in der Westschweiz und vor allem im Arc lmanique ber knappen Wohnraum und hohe Immobilienpreise nicht in eine hhere Zustimmung zur Initiative mndeten.

So in general the Kantone with a higher share share of EU-citiziens, higher density and higher economic growth have say 'No' to the initiative.


P.S: It is always interesting to quickly check what you have written some months ago. In terms of stocks every single one that I bought and mentioned here in the last year has considerably outperformed the market. ENEL and Telecom Italia were simply so cheap compared to the value that sooner or later they had to rise, roughly 40% and 50% compared to the roughly 15% of the Eurostoxx 50. Apple and VW gained roughly 30% compared to the E50's ~15% in their timeframe. The last two actually lost a considerable amount in the last month. In Apples case I bought new stock at around 510$ because the fundamentals are still good enough IMHO and the financial guys did the right thing and bought back stock big time. See my orginal reasoning a year ago.

I hoped before the shareholder meeting that Apple would drastically increase their buybacks for those very reasons and they did announce pretty much that. Doing it with bonds, the capital of others, with such a low yield for such long periods is brilliant from the two angles called equity and taxes. Sadly the stock price went up so quickly, now those buy backs will cost more. At 400 $ the EPS would have went up over 30% for the shareholder even if the earnings had stayed (inflation-adjusted) flat...

P.P.S: I now went back further and it is good to see that in the the short term I was completely wrong about the two big Telecom companies of Germany and France. Orange looked much more attractive but gained only a bit over 10% (the dividend yield was of course a lot higher then the E50 average) while Deutsche did almost make 50%. I did sell a third of my Orange stock at ~25% months ago to lower the overall ratio of shares. I actually threw out the little DT I had over a year ago, and personally I would even more eagerly sell it now. While overall Orange earned for me a bit more then the E50, one has to consider that as a underperformer. So it is not 4/4 but for 4/5 which outperformed the Eurostoxx50 benchmark.

[Firn]

With an earlier SVP initative and success it is rather likely that Switzerland would have still 0 medals instead of 2 golden ones. It is certainly no small irony that two much praised Swiss champs are also fully kids of immigrants, one of Italian heritage and another of Russian.

Dario Cologna has grown up right across the border from Italian parents, Italian as a father language and German as mother language and played youth football in Italy. As a son of his home valley he also speaks Romansh. Quite a big loss for our team.

Adriano, Langenthal: Hoi Dario, was hast Du eigentlich für eine Abstammung? Bist Du halb Italiener?

Dario Cologna: Die Mutter ist Südtirolerin und auch mein Vater ist in Italien aufgewachsen. Für mich hat sich die Frage nie gestellt, für Italien zu starten. Ich bin in der Schweiz geboren und aufgewachsen.

BTW one of the Swiss things I love is that a national German-language paper brings a Romansh question without translation. Unthinkable in Italy.

Hasch tü realis cha nu deran sper la loipa e sbrajian sco nars e dera quai per tai motivant? Chars salds Flavio

Dario Cologna: Hoi Flavio, grazia fich! cun quai cha jau vea n pa avantag nhaja schon bada cha blers fans dasper la loipe a fanar e quai ha dar natralmaing amo daplü forza :-)

Iouri Podladtchikov is the other example how Switzerland profited from human capital from abroad. A son of a highly educated Russian couple which left a poor Russia in turmoil he won now gold for Switzerland.

Aber eigentlich kann er Kontrolle durch andere nicht ertragen, nur durch sich. Iouri, sagen seine Eltern Yuri Podladtchikov und Valentina Podladtchikova, ein Professor für Geophysik und eine Mathematikerin, sei ein Kontrollfreak. Einer, von dem sie hätten lernen mssen, dass er sich nicht dreinreden lasse, jeder Hauch von Einflussnahme ist kontraproduktiv, selbst wenn es um den Kauf eines Autos geht. Wenn aber wir ein Auto kaufen wollen, so die Mama, ist er der Erste, der auf uns einzuwirken versucht.

Interestingly he himself did point out why Switzerland in general could reap so much profit from its large wealth and great institutions in combination with much of the best European immigrants or commuters. The Swiss organization is just far more professional. In 2007, with 18 years he took the Swiss instead of the Russian citizienship.

Podladtchikovs Vater, ein Professor für Geophysik, wanderte im Jahr 1992 samt seiner Familie aus Russland nach Westeuropa aus. Nach Stationen in Schweden und den Niederlanden ließen sich die Podladtchikovs 1996 in der Schweiz nieder. Bis zum Sommer 2007 blieb Iouri Podladtchikov russischer Staatsbrger und nahm für Russland an Wettkmpfen teil, dann wurde er Schweizer Staatsbrger. Ob seiner guten Leistungen in dem darauffolgenden Winter erhielt der Snowboarder nach eigenen Angaben ein Angebot des russischen Verbandes, wieder für diesen zu starten. Diese Offerte wies er jedoch zurck, mit der Begründung, im Schweizer Verband sei alles viel professioneller. Neben dem Snowboard fährt Podladtchikov wie auch andere Athleten der Disziplin gerne Skateboard.[7]

P.S: The forum software really butchers Romansh, Italian, Spanish and German, almost as much as I do with English...

Found also a neat, powerful picture about the Swiss 'Nati' without the genes from other countries:

Ob Granit Xhaka, Xherdan Shaqiri, Gökhan Inler, Tranquillo Barnetta oder Diego Benaglio - alle diese Schweizer Nationalspieler stammen aus Familien, die einst in die Schweiz einwanderten.

[Firn]

There is little economic in it, sadly once again we had an all too Italian and all too disgusting act of internal party politics toppling our PM. The sounds of Renzis knives getting sharpened have been heard for some time and now the 'young' major of Florence, which never stood in a national election will become our new PM. The 'vignetta' tells us a lot:



Never say never. Renzi speaking:

'Never political games like in the first republic'
'Never against Letta'
'Never without the popular vote'
'Never with the center-right'
'Oh, the moment has already arrived?' (Surprise) 'I would have never said (expected) that'

Who can I vote for such a man and a party which has played a very similar game now so often in the recent past. Only in 2013 in the PD this happened:

On March 22, President Giorgio Napolitano asked Bersani to form a new government.[9] On March 27, Bersani failed to strike a deal for forming a new Italian government with the grassroots Five-Star Movement (M5S) which holds the balance of power after February's inconclusive elections.[10] On April 19, Bersani announced he would be stepping down from his post as Democratic Party leader after Romano Prodi failed to secure a parliamentary majority in the presidential election.[11]

Renzi had already his hand in the shameful manner Prodi was deserted right at the election by a great part of his own party.



Now I saw his last tweet, he will say what he has to say tomorrow, in streaming, 'with an open face'. No hint of irony of course.

The Italian governments since WWII, as everybody can see there is not a single one which ruled the full 'normal' legislatura. In fact only Berlusconi II -III comes close.

[Firn]

I will only comment on Italian politics after the dust from the infighting has settle, at least for the time being. It is just a too disgusting spectacle right now.

The NZZ explains in simple and frank terms the logic of the EU actions. A long time ago I had European law as a course and althought I have forgotten most the basic principles are still present. I even have the Codex somewhere.

In short there are no surprises in the way the EU acts, apart perhaps from the speed. One has to keep three concepts in mind:

1) The national sovereignty of Switzerland with it's strong comittment to direct democracy.

2) The inter/supranational nature of the EU with it's intricate systems of treaties. In simplistic terms the EU is entitled in certain areas by it's member states to act instead.

3) The specific nature of the treaties between the two entities. The 'Freizuegigkeit' was a part of a bundle 'Bilateralen I' which has to be accepted as a whole by both sides.

The Swiss government finds himself against it's will in a very difficult situation in which it fights, in Swiss parlance, with far shorter pikes.

[Firn]

Hopefully the good qualities of the EU will prevail over Italian fiscal madness:

Interrogazioni Ppe-euroscettici, viola trattati Ue libera circolazione capitali - Due distinte interrogazioni parlamentari sono state presentate alla Commissione europea per il prelievo del 20% sui bonifici dall'estero imposto dal primo febbraio dalla Agenzia delle Entrate. Nei testi si ipotizza la violazione dell'art.63 del Trattato sul funzionamento della Ue, che vieta le restrizioni dei pagamenti tra gli stati membri. A presentare le interrogazioni, due eurodeputati ex leghisti: Tino Rossi (Forza Italia/Ppe) e Claudio Morganti (Io Cambio/Eld, il gruppo euroscettico).

Per i consumatori un abuso, per evitarlo serve autocertificazione - I consumatori gi nei giorni scorsi avevano definito "l'ennesimo abuso di potere" la ritenuta del 20% che le banche sono obbligate a trattenere su tutti i bonifici esteri che arrivano sui conti correnti italiani, rappresenta. Adusbef e Federconsumatori hanno ricordato in una nota che dal primo febbraio 2014 sui bonifici dall'estero a persone fisiche italiane la banca deve applicare automaticamente una ritenuta del 20% perch le somme accreditate si considerano reddito imponibile, salvo prova contraria del contribuente. Spetta al beneficiario del bonifico, infatti, dimostrare che le somme non hanno natura di compenso "reddituale"

Basically if you or somebody else transfers money from a non-Italian account to an Italian the dear state will take 20% from you, unless you get to considerable lenghts to show that it was properly earned money. To burden of proof is on the citizien and it looks like a pain to get that proof through our bureaucracy. If you work currently abroad, as a considerable amount of high-qualified Italians do and you want to pay something for your property, family and so forth you face considerable costs. Even if you earned it honestly and even if it that will get accepted by our slow-movers you face uncertainty and loss of time.

For Italians working relative close to Italy it becomes ironically now more attractive to take your money in cash accross the frontier without declaring anything. Under 10000 per capita you are fine and the chances to get controlled at all are very slim. This is important as with the complicate and plentiful Italian laws, slow bureaucracy and crawling courts you really want to avoid any possible hassle. Sadly that in turn makes it more likely that it gets used to pay something black. Brilliant.

So I really hope the EU steps in to stop this idiocy which IMHO violates EU law.

[Firn]

Money launderer until proven innocent is the reaction on Zero Hedge. It is difficult to argue with that. It is just the latest of a barrage of laws aimed at reducing the cash ratio in transactions.

To me it seems just a good example of the worst of Italian lawmaking.

P.S: Maybe I will in future just google translate longer Italian, German and Spanish pieces as it is more rational for the viewers.

[Firn]

I tried to find sources to get a rough understanding about the volume of money potentially involved. So far no luck.

Maybe the short-term liquidity aspect was at least partly behind that law. If our dear government keeps those 20% of a large enough sum through bureaucratic hurdles for a couple of weeks it will certainly reduce the interest rates on Italian debt. Combined with what gets kept it will make a short-term positive impact on the balance sheet.

Needless to say that it won't exactly encourage investment into Italy, be it by foreigners or Italians themselves. It is no secret that a considerable amount of better-off Italians has purchased property in other EU countries. That tax and the recent Italian policies create strong incentives to keep the capital abroad.

[Fuchs]

That tax and the recent Italian policies create strong incentives to keep the capital abroad.

Capital import's desirability is overrated anyway.