Turmoil in the Markets

I don’t know about anyone else, but there seem to me to be a lot of things happening in the money world.

The price of oil has crashed to something less than $50 a barrel, making fracking and North Sea oil uneconomic. The cause, it seems, is oversupply in the face of falling demand.

The Swiss franc, pegged against the Euro for several years, has been unpegged, resulting in something like a 30% rise in its value. Which will result in deflation in Switzerland, and the collapse of Swiss exports, bringing rising unemployment.

And Russia has cut off gas supplies to and through Ukraine.

But what shocked me most was this from the Telegraph’s Ambrose Evans-Pritchard last week:

The European Court of Justice has declared legal supremacy over the sovereign state of Germany, and therefore of Britain, France, Denmark and Poland as well.

The ECJ’s advocate-general has not only brushed aside the careful findings of the German constitutional court on a matter of highest importance, he has gone so far as to claim that Germany is obliged to submit to the final decision. “We cannot possibly accept this and they know it,” said one German jurist close to the case.

The matter at hand is whether the European Central Bank broke the law with its back-stop plan for Italian and Spanish debt (OMT) in 2012. The teleological ECJ – always eager to further the cause of EU integration – did come up with the politically-correct answer as expected. The ECB is in the clear. The opinion is a green light for quantitative easing next week, legally never in doubt.

The European Court did defer to the Verfassungsgericht in Karlsruhe on a few points. The ECB must not get mixed up with the EU bail-out fund (ESM) or take part in Troika rescue operations. But these details are not the deeper import of the case.

The opinion is a vaulting assertion of EU primacy. If the Karlsruhe accepts this, the implication is that Germany will no longer be a fully self-governing sovereign state.

The advocate-general knows he is risking a showdown but views this fight as unavoidable. “It seems to me an all but impossible task to preserve this Union, as we know it today, if it is to be made subject to an absolute reservation, ill-defined and virtually at the discretion of each of the Member States,” he said.

In this he is right. “This Union” – meaning the Union to which EU integrationists aspire – is currently blocked by the German court, the last safeguard of our nation states against encroachment. This is why the battle is historic.

Historic indeed. This is the EU superstate/empire making a power grab. If the Karlsruhe court gives in, that will indeed be the end of the sovereign state.

But no sign of ECB quantitative easing this week, so far. So I suppose they haven’t given in yet.

I can’t say that I really understand QE, except that it’s a way of providing liquidity for struggling banks. But German bankers don’t like it because to them it looks like inflationary money-printing of the sort experienced in Germany after WW1.

Maybe it does the job of providing liquidity very well, but it provides no stimulus to the economy. So Europe is sinking deeper and deeper into slump.

To kickstart European economies, there needs to be wholesale deregulation. And the EU is one vast regulation generator. It doesn’t actually do anything else. So getting rid of the EU would be a good start.

But the entire European political class remains wedded to the Union. It’s only ordinary people who are growing increasingly disenchanted. And ordinary people don’t count.

But demand for deregulation is likely to get louder and louder.

And one little set of regulations that need deregulation are Europe’s smoking bans, of course.

It may be that the EU power grab is a last ditch bluff before the EU ‘project’ finally turns belly up.


O.T. H/T Simon Clark, Jredheadgirl in NOLA

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27 Responses to Turmoil in the Markets

  1. waltc says:

    I think you mean belly up and I hope you’re right. Might be time to rerun that 1929 poster with a new caption — change socialism to the EU and change conservative to …withdrawal, or whatever the official term for skedaddling is

    On yesterday’s brouhaha: I’d laugh if it weren’t so (I guess) serious but believe me, the last thing on my mind was Stewart’s Christianity. It’s just a common phrase, at least to me, not even slightly literal, and I was merely pissed at his A) fussiness, B) bringing up yet again! ( warning: joke here ) SV’s murderous past, and C) the hectoring tutorial tone. I did not, however, realize how truly fragile he is, and spoke to him as I’d speak to any other grownup, (which is actually a compliment, Stewart) .And . FTR, Stewart, I’m indeed genuinely sorry you were hurt and believe I can understand how your un intended isolation can lead ton blowing small things out of proportion. For your own sake–and don’t take this as patronization, I truly hope you can work that out so life becomes more tolerable.

    • mikef317 says:

      Walt, nice comment, but I wouldn’t laugh. Stewart appears to take offhand / not really serious remarks with utmost gravity. (Smokervoter confessing to murder.)

      Stewart, the rest of this comment is addressed to you (and I’m reasonably sure you’re reading it). I was one of those who welcomed you back.

      You place much emphasis on being a Christian. Ok, but other than someone posting as Churchmouse, I don’t have the vaguest notion of the religion of anyone who comments on this blog. And I don’t care. Other than your comments, religion it is not a topic of conversation. Certainly, no one is attacking your faith.

      You calculated the amount of time and money it costs you to read Frank’s blog and to write comments. I’m 100% certain that Frank never asked for this. I look at his blog several times a day, often spend hours pondering the comments, and even more hours if I decide to write a lengthy response. I sure as hell don’t expect Frank to pay me for the erudite wisdom of my remarks (but – joking – wouldn’t object if he did).

      Frank has an extremely liberal comment policy. That he is monitoring your remarks says more about you than about him.

      Stewart, I don’t think you have any enemies here. And I don’t think you should make any.

    • Frank Davis says:

      Thanks for that correction, Walt. I was falling asleep. Again.

  2. margo says:

    Thanks so much, Frank, for creating my cartoon idea yesterday. I’ve just seen it (I always go back in the mornings to see what I missed yesterday) and it’s made me laugh out loud. I like the ‘pinnocchio’ idea too, and the 1929 poster – very apt for today.

  3. margo says:

    I equate modern anti-smoking with 19th century panic about masturbation. See this amusing article by Michael Voll: 5 Insane Ways Fear of Masturbation Shaped the Modern World
    The doctors were sure they were right then, as well – the science was settled.

  4. beobrigitte says:

    I don’t know about anyone else, but there seem to me to be a lot of things happening in the money world.

    Why am I the only person not surprised? I know virtually nothing about business, but what I can see is that Labour’s habit of creating one bubble after the next (short term gains – long term disasters) + the tories’ encouragement of Yuppie behaviour was bound to backfire. The whole thing WILL collapse in the end simply because we have allowed an upward spiral that cannot be maintained whilst at the same time kicking out paying customers for ‘health reasons’.

    I never had much confidence in politics, now it equals nil. What did make me laugh the other day was Labour’s election promise: more smoking bans.

    Enough said.

    Oh, and for our fellow ‘global-warming-believers’ – I believe the increasing erratic space ‘weather’ + the prospect of e.g. the yellowstone park super volcano errupting (it is by now 40 000 years overdue and the bulging of a large area has been observed) will bury ‘man-made-global-warming’ alongside tobacco control within hours.

    I’d rather bury tobacco control before that.

  5. Column: The history of anti-smoking zealots


    Posted: Tuesday, January 20, 2015 10:10 am

    Duff Hale Guest Columnist

    To get to the birth of today’s anti-smoking zealotry it is necessary to look back about 85 years. At that time one man was a teetotaler, vegetarian, and an anti-smoking extremist.

    Many of the laws and ordinances passed today derive from his beliefs and attitudes. In fact, he was behind the banning of tobacco advertising and the financing of numerous public relations campaigns to convince people not to smoke.

    His government banned smoking in all government offices, public transportation, university campuses, rest homes, post offices, many restaurants and bars, hospitals and their grounds as well as workplaces.

    He called for a ban on smoking in private automobiles.

    The Health Office warned smoking caused impotence and produced posters linking smoking to unfavorable groups.

    Anti-smoking lobbyists lectured terrified children in schools about the horrors of racial impurity that resulted from smoking.

    This government coined the term “passive smoking” while offering no empirical evidence to prove smokers poisoned everyone around them, but then again they said drinking coffee caused cancer.

    The anti-smoking crusade was unleashed aided by junk science on behalf of the medical and health establishments. One prime example is that smoking caused pregnant women to spontaneously abort their babies.

    They attempted to stop smoking by pricing the products out of the range of the citizens levying huge taxes on cigarettes.

    Does this sound familiar? It’s all about control and letting you know who’s the boss. If government can regulate our personal habits and behavior who knows what comes next. There have been bans on trans-fats, super-sized orders of fries and 16 oz. sugary drinks all done, of course, for our own good.

    If government is as concerned with our health, as it would have you believe, then perhaps if you disagree your beliefs and political opinions are a mental health issue. Could the banning of free speech that is offensive to others be in the future? Oh, well, that’s already happening many places, including Canada, colleges and universities, isn’t it? We mustn’t offend others should we? God forbid!

    I hope you can see where all this is heading. How long before the infringement of our rights will take on some new and frightening aspects of an unbelievably intrusive nature?

    Let’s face it. We live in an obsessed world occupied by people who dare not venture forward for fear there might be a law against it, or might upset or offend someone, or it might be bad for their health.

    Just for the record, I’m a non-smoker and haven’t smoked in over 35 years. But I should have the right to do so if I’m so inclined and be able to do it in a business that is willing to allow it if they so choose.

    I know a lot of people reading this will probably be offended because they have lost loved ones as a result of smoking. I’m not trying to say smoking is OK or healthy, but the risk of government over-regulation of our lives is even more risky. And regulation of personal habits often leads to dictatorship.

    If you haven’t guessed by now, the name of the man behind all this and whose beliefs got it all started was Adolph Hitler.

    The very notion the language and policies bombarding us every day as justification for state regulation of our personal habits and lifestyle choices came directly from Nazi policies should scare us right down to our toes. And, knowing the true agenda behind today’s anti-smoking purge is not all about our health but all about controlling our lives that should serve as a wake-up call for us all.

    It’s like Thomas Sowell said, “If we are going to give the government more power over our lives every time we discover a flaw in our society, then we may as well vote in totalitarianism all at once, with our eyes open, rather than have it steal upon us little by little while we are hypnotized by the rhetoric of each individual crisis.”

    Duff Hale is a resident of Midlothian and a frequent contributor to the Daily Light and Midlothian Mirror.

  6. Cop Hop: Williams Proposes Cutting NOPD from Smoking Ordinance

    Councilmember LaToya Cantrell’s proposed ordinance on smoking has generated a lot of controversy. It’s not just tobacco types who are upset with the legislation. Even ardent opponents of smoke have criticized Ordinance 30,455 for placing enforcement on the the New Orleans {Police Department (NOPD) during a crime spree. Today (1.20), Councilmember Jason Williams introduced an amendment to address the issue.

    Williams’ amendment eliminates the NOPD from the proposed enforcement role. In a release, Williams said, ““Crime in New Orleans is my number one concern. Citizens do not feel safe, and constituents continually tell me that reducing crime should be my top priority. I support the ban on smoking indoors. And applaud Councilmember Cantrell on her hard work to bring the Smokefree New Orleans ordinance to the City Council. However, I cannot support an ordinance which places any additional burdens on the NOPD. I will not support the ordinance unless it makes clear that the NOPD should not enforce the ban on smoking. Rates of crime are increasing while our police force is shrinking. Our citizens feel unsafe, and so I must do everything I can to promote their safety, and support our police force to reform and improve. The police must focus on violent crime—murders, rapes, and armed robberies. We should not delay officers for even a minute in order to address smoking in bars.”

    The Councilmember went on to add that he also does not want to create the potential for more conflict between police and citizens. He explains, “I don’t want police to use the provisions of this ordinance to conduct pretextual stops, which are ultimately a form of harassment, too often inflicted on the minority populations of this city. Provisions of the ordinance could easily be abused by an officer looking to stop an innocent citizen.”

  7. Frank on Bloomberg Economics Business channel they just posted on the ticker tape that FACEBOOK created 4.5 million jobs to the global economy! It says It Attracts marketers and developers making money off the net….. Biggest economic impact of 100 Billion dollars seen in U.S. history.

    Then it states Facebook estimated to add 227 billion to world economy…………

    That’s all quotes from the TV I have the screen frozen while I typed it out………..

    Facebook isn’t making money it never really has,what its making is ad space running PSA public servive announcements for the governmet and special interest groups. Ive yet to truly see a real ad for a actual product yet on my facebook run its all government fed BS ads or non profit ads begging for this or that. The SPCA ones are the worse even worse than the anti-smoking ads they’ve been running! Truthfully I believe the FED was the ones who actually dropped the cash to buy up most of FACEBOOK to start with back when it first went IPO. Of course when the FED owns something it actually means an investment banker owns it thru a cash window scheme to wall st by the FED hacks………….

    • Andrew Phillips

      Yesterday at 3:08pm ·
      Look it’s the recovery & the bankers machinations are coming home to roost.

      There’s blood on the Street: Obama economy in “recovery?” Banks just cut 50,000 jobs. Bank…

      There’s blood on the Street. In a wild swing of the ax that has shocked many pundits, Wall Street’s biggest banks have slashed nearly 50,000 jobs, and…


      • There’s blood on the Street: Obama economy in “recovery?” Banks just cut 50,000 jobs. Bank revenues lowest in 8 decades- since Great Depression.

        Submitted by IWB, on January 19th, 2015

        There’s blood on the Street.

        In a wild swing of the ax that has shocked many pundits, Wall Street’s biggest banks have slashed nearly 50,000 jobs, and bonuses and expense money are being cut as profit opportunities dry up.

        And there’s no easy way out, analysts say, because the Fed’s quantitative easing that once rescued the financial system with trillions of cheap dollars is — at least for now — history.

        But while some analysts were unnerved by the carnage announced by banks last week during their earnings calls, the warning signs were there before — from lower trading and commodities revenues to currency risks and long-term interest rates that have trended lower.

        The fourth quarter saw thousands more workers fired. Total reductions for 2014 were about 20,000 at Brian Moynihan’s Bank of America; 10,000 at Citigroup led by Michael Corbat; and 10,000 at Jaime Dimon’s JP Morgan. Morgan Stanley reports on Tuesday.

  8. E-cig supporters will back smoking ordinance if removed from the ban

    This week, the New Orleans City Council will vote on a measure that could ban smoking, including electronic cigarettes, in bars and casinos citywide


  9. jaxthefirst says:

    Now I’m thoroughly confused, Frank! I thought that EU (via the ECJ) supremacy was already established via the Lisbon Treaty (or was it the Maastrict one? Or Rome? There’s been so many that I forget). So surely the fact that the ECJ is enforcing this supremacy in this case is little more than rubber-stamping, as the article’s author points out. The ECJ’s mistake, in my view, is the fact that in this instance it’s actually getting up the noses of the Germans who, as we all know, are basically in charge of the EU and (although they never say so in so many words) see themselves that way – a bit like the Americans are in charge of the UN, although everyone tries to keep up a lovely, happy-clappy facade of “shared co-operation.” So the ECJ is treading on thin ice here. If they upset the Germans, and the Germans decide to rebel in some way (though God knows how they might do that – pull out, maybe? Ha, ha, ha!), then it really could spell the end for the whole EU project. And about time, too. How ironic that it should be one of the EU’s own institutions which should bring about its own demise; I’m just a bit sorry that it wasn’t the UK’s withdrawal which caused the downfall, but ho-hum, any port in a storm and all that.

    What is curious, though, is that this story hasn’t even made the bottom line on either the radio or TV news bulletins (I don’t read any of the papers, so I don’t know if this Telegraph report is isolated or not). On a matter of such importance, you’d think that it would take precedence over the death of a popular actress (sad though that is) or the decision by the Sun to stop publishing pictures of topless girls on Page 3. To my knowledge, even Farage has been silent on this issue, when you’d think he’d be shouting: “Look! We told you so!” from the rooftops.

  10. Pingback: Some Responses to ECB QE | Frank Davis

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