Euro Pressure as Crisis Approaches

Crisis - the turning point of a disease when an important change takes place, indicating either recovery or death

Social mood peaked in the year 2000 and has been falling ever since. The breakdown of the EU, euro and global trade is predicted by Socionomic theory assuming the fall in social mood reaches extreme levels. The seeds of the unwinding have been sprouting for more than a decade as nationalism rises. The political leadership across much of the West has implemented policies that only exacerbate the trend towards nationalism.

While the breakup moment may still be a couple years away, events are picking up speed as protectionist and nationalist sentiment across Europe and the United States creates more problems for a global system that doesn't make accommodation for it.

The latest burst of conflict began with the fine of Apple.

Guardian: Apple ordered to pay €13bn after EU rules Ireland broke state aid laws

The Department of Justice retaliated.

Fortune: Deutsche Bank Says DoJ Wants It to Pay $14 Billion to Settle Mortgages Case

Either the Obama Administration is staffed with total morons or they are intentionally looking for a target to pin a global financial crisis on. Because Deutsche Bank is the weakest firm in the global financial system at the moment, and the DoJ hit it with a fine that could push it over the edge.

More EU fines are likely, which could invite more retaliation: Apple Is Just the Beginning of Europe’s New War on U.S. Business
But this battle extends far beyond Apple. At stake is what happens to about $2 trillion that U.S. companies are estimated to have stashed abroad, out of reach of the U.S.’s 35% corporate tax. With governments vowing to crack down on tax havens, the scramble to decide where such levies might go has begun, and several EU countries, including France, Italy, and Germany, believe Apple owes them, too, a slice of those revenues.

No matter how the fight plays out, Apple’s fine may signal the end of decades of U.S. companies quietly cutting sweetheart tax deals with smaller EU countries. For years the arrangement suited both sides, with cash-strapped governments scheming to create jobs, and U.S. companies eager to boost profits. “For so long the attitude has been, ‘Whatever our lawyers can get away with is okay,’ ” says Markus Meinzer, director of the London-based Tax Justice Network. That’s no longer likely to be the case, he says, calling the ruling “historic and tide turning.”
Also the EU wants Google to stop anti-competitive Android practices, fine expected
The document, running to more than 150 pages, was sent to complainants last week for feedback. Google received a copy in April in which the European Commission accused it of using its dominant Android mobile operating system to shut out rivals.

The EU competition enforcer in its charge sheet, known as a statement of objections, said it planned to tell the U.S. technology giant to halt payments or discounts to mobile phone manufacturers in return for pre-installing Google's Play Store with Google Search.
If the U.S. is retaliating against Deutsche Bank, the current tit-for-tat cycle points to more of it.

Back to Deutsche Bank. The Germans and other hard-money countries pushed Greece to the wall. They passed new bail-in rules that force shareholders and creditors (which includes depositors) to take losses when a bank fails, Cyprus being the first major case. Recently, Germany also nixed Italian plans for a bailout of Italian banks.

German media this weekend said Germany cannot break the rules it created and enforced: Germany's Merkel cannot afford to bail out Deutsche Bank
"Of course Chancellor Merkel doesn't want to give Deutsche Bank any state aid," it wrote in a front-page editorial. "She cannot afford it from the point of view of foreign policy because Berlin is taking a hard line in the Italian bank rescue."

The Munich-based Sueddeutsche Zeitung wrote that Merkel would be breaking a promise to taxpayers if she were to bail the bank out, which could spell disaster for her re-election bid next year as the anti-immigration AfD party gains ground.

The AfD is already benefiting from a backlash against Merkel's open-door refugee policy, making huge gains in two regional elections last month and hitting an all-time high of 16 percent support in an opinion poll last week.

"A state aid package would drive voters into the arms of the AfD," the Sueddeutsche wrote in an editorial.

"Domestic political considerations make it unlikely that Berlin would play this joker. Even more unlikely is that the European Commission would agree. The political risk would be simply too high."
Ex-Deutsche Bank Executives Among 13 Charged in Paschi Probe
Six current and former managers of Deutsche Bank AG -- including ex-asset and wealth management head Michele Faissola -- along with former executives at Nomura Holdings Inc. and Banca Monte dei Paschi di Siena SpA were charged in Milan for colluding to falsify the accounts of Italy’s third-biggest bank and manipulate the market.

A judge in Milan approved a request by prosecutors to try 13 bankers on charges over separate derivative transactions Paschi arranged with the securities firms, said a lawyer involved in the case, who attended the closed-door hearing Saturday, where the decision was announced.
Unless there's a way out of the situation, Deutsche Bank will either impose an economic cost on the euro, or a political one. The dollar bull market may be about to resume.

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