Italy
First off, a new study shows that banks are unpopular in Italy -- swear to God someone decided that this was an important metric -- in a country where banks are continually being rescued by the central government. Apparently, their popularity level is at 16% -- I suspect that banks are not very popular elsewhere either!
Anyway, what is really interesting is the capital flight from Italy -- you see I don't like my bank at all, its services are expensive and when you really need there, they are not interested in working with you...but I know they are good at what they do and secure (Hurray for Canadian Banks). What's going on in Italy is different; its capital flight to the tune of Euro 432 billion per annum (or at least for the past 12 months). The problem is that the most popular political party right now is the Five Star Movement -- that is rabidly anti Europe (yes even after seeing what's happening in the UK -- which is not part of the Euro). They want out too!
That's the real reason the cash is on its way out, you don't trust the banks, you don't trust the government so you export your assets -- and if you are smart you massively mortgage your local assets so that if they are seized by the government -- its the government money you are taking (because virtually all banks in Italy are destined to be owned by the government -- due to their very very high NPL balances). If you want an additional Fu$k You! I've seen it before -- when you think you are going to be expropriated you mortgage everything to the max -- cut CAPEX and wait and see; watch Italy over the coming months (I bet you that CAPEX will drop dramatically).
Saudi Arabia
As for Saudi Arabia -- the war in Yemen was always a massively expensive error, unprompted (maybe the support of the Americans), and unwinable this quagmire has made of mess of the massively complex governing of Saudi Arabia. A few weeks ago the listing/sale of Aramco was put on hold indefinitely, previously an anti-corruption council was set up, and last week multiple arrest of serval "untouchables" occurred -- one prince went down in a gun battle!
Very much like the GOP, the House of Saud has its own infinitely complicated internal political battles and balances -- to say that the current leaders have upset the apple cart would be a massive understatement. One thing for sure -- its far from over.
The implication is serious for oil prices (because I don't care so much about the life and prison time of Saudi price -- who are apparently imprisoned in the Ritz Carlton. Saudi Arabia has always played a balancing act, increasing and decreasing the supply of oil to insure that price stability would occur. until a few days ago I would bet on a war with North Korea (seems that Trump is backing down from that fight), so that odds are the oil prices going further up is somewhat lower -- it was at $49/51 just a few weeks ago and its now trading at $57 down from $59 -- that's my friends is a 20% price rise in just a few weeks -- that's not nothing!
Conclusions:
These are two (ok maybe three massive political issues) that will have an impact on prices -- of money and goods -- lets be honest who noticed that gasoline prices had risen from $49 to $50 in 15 days...not me!
The implication of Italians taking their cash out of Italy, of the breakdown of government in Saudi Arabia -- and the likely unwinding of the Korean situation will force players to change their game. Trump will refocus on domestic agenda -- and you can bet that NAFTA is back on line. My friends and acquaintances involved in the conversations with the Americans are all saying that America is playing a very strange game -- as if they are looking to loose the conversation (maybe in order to win a kill for NAFTA), my friends (both in Canada and Mexico) are saying the same thing, that the American demands are unreasonable -- in Canada, the Americans want full access to government procurement RFPs while providing no quid pro quo -- barring Canadian companies from bidding on American Government projects.
The surprise is that the Americans agreed to prolong the talks by six months -- delaying the final showdown -- most believe that this is a political ploy to bring the whole thing closer to the 2018 mid term elections. But again the cost if killing NAFTA would be fealty far worse in the fly-over counties of middle America -- that have voted for Trump. Already Iowa is feeling the pain with Mexico now looking elsewhere for its grain (did that this summer -- not participating in the 2017 June grain auction) when in the past Mexico was 20% of total volume -- the impact on price was deeply felt, but then Iowa's politicians have been notably anti-Mexican of late, so the reaction can be understood.
I've said it before, America that was a bastion of freedom is now seen as mean and bitchy. You don't seek to do business with people like that, unless you have no choice, because they will always try to screw you
First off, a new study shows that banks are unpopular in Italy -- swear to God someone decided that this was an important metric -- in a country where banks are continually being rescued by the central government. Apparently, their popularity level is at 16% -- I suspect that banks are not very popular elsewhere either!
Anyway, what is really interesting is the capital flight from Italy -- you see I don't like my bank at all, its services are expensive and when you really need there, they are not interested in working with you...but I know they are good at what they do and secure (Hurray for Canadian Banks). What's going on in Italy is different; its capital flight to the tune of Euro 432 billion per annum (or at least for the past 12 months). The problem is that the most popular political party right now is the Five Star Movement -- that is rabidly anti Europe (yes even after seeing what's happening in the UK -- which is not part of the Euro). They want out too!
That's the real reason the cash is on its way out, you don't trust the banks, you don't trust the government so you export your assets -- and if you are smart you massively mortgage your local assets so that if they are seized by the government -- its the government money you are taking (because virtually all banks in Italy are destined to be owned by the government -- due to their very very high NPL balances). If you want an additional Fu$k You! I've seen it before -- when you think you are going to be expropriated you mortgage everything to the max -- cut CAPEX and wait and see; watch Italy over the coming months (I bet you that CAPEX will drop dramatically).
Saudi Arabia
As for Saudi Arabia -- the war in Yemen was always a massively expensive error, unprompted (maybe the support of the Americans), and unwinable this quagmire has made of mess of the massively complex governing of Saudi Arabia. A few weeks ago the listing/sale of Aramco was put on hold indefinitely, previously an anti-corruption council was set up, and last week multiple arrest of serval "untouchables" occurred -- one prince went down in a gun battle!
Very much like the GOP, the House of Saud has its own infinitely complicated internal political battles and balances -- to say that the current leaders have upset the apple cart would be a massive understatement. One thing for sure -- its far from over.
The implication is serious for oil prices (because I don't care so much about the life and prison time of Saudi price -- who are apparently imprisoned in the Ritz Carlton. Saudi Arabia has always played a balancing act, increasing and decreasing the supply of oil to insure that price stability would occur. until a few days ago I would bet on a war with North Korea (seems that Trump is backing down from that fight), so that odds are the oil prices going further up is somewhat lower -- it was at $49/51 just a few weeks ago and its now trading at $57 down from $59 -- that's my friends is a 20% price rise in just a few weeks -- that's not nothing!
Conclusions:
These are two (ok maybe three massive political issues) that will have an impact on prices -- of money and goods -- lets be honest who noticed that gasoline prices had risen from $49 to $50 in 15 days...not me!
The implication of Italians taking their cash out of Italy, of the breakdown of government in Saudi Arabia -- and the likely unwinding of the Korean situation will force players to change their game. Trump will refocus on domestic agenda -- and you can bet that NAFTA is back on line. My friends and acquaintances involved in the conversations with the Americans are all saying that America is playing a very strange game -- as if they are looking to loose the conversation (maybe in order to win a kill for NAFTA), my friends (both in Canada and Mexico) are saying the same thing, that the American demands are unreasonable -- in Canada, the Americans want full access to government procurement RFPs while providing no quid pro quo -- barring Canadian companies from bidding on American Government projects.
The surprise is that the Americans agreed to prolong the talks by six months -- delaying the final showdown -- most believe that this is a political ploy to bring the whole thing closer to the 2018 mid term elections. But again the cost if killing NAFTA would be fealty far worse in the fly-over counties of middle America -- that have voted for Trump. Already Iowa is feeling the pain with Mexico now looking elsewhere for its grain (did that this summer -- not participating in the 2017 June grain auction) when in the past Mexico was 20% of total volume -- the impact on price was deeply felt, but then Iowa's politicians have been notably anti-Mexican of late, so the reaction can be understood.
I've said it before, America that was a bastion of freedom is now seen as mean and bitchy. You don't seek to do business with people like that, unless you have no choice, because they will always try to screw you
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