The Spanish Civil War, Revisited: Pepe Escobar Fears "Lethal Response" From Madrid

Authored by Pepe Escobar via The Asia Times,

Puigdemont"s political twist could invoke a lethal response from Madrid: suspension of Catalonia"s government

Call it theatre of the absurd – with a lethal subtext. Under pressure from all corners – even Donald Tusk, president of the EU Council – in his fateful date with destiny Carles Puigdemont, President of Catalonia, came up with some last-minute judo dialectics. He issued a non-denial denial Unilateral Declaration of Independence from Spain. What was declared was immediately suspended; the Republic of Catalonia lasted for six seconds.

The deft political gambit left Madrid predictably bewildered. Prime Minister Mariano Rajoy, a.k.a. nano-Franco, issued an ultimatum; you have five days to say if you declared independence or not.

Independent of the answer, Madrid’s nuclear option remains on the cards; infamous article 155 of the Constitution, which calls for the suspension of Catalonia’s government and parliament from six to 12 months.

Yet that may come with a twist; a 155 in slow motion, parallel to the hazy offer of starting a process, in six months maximum, leading to Spanish constitutional reform. Madrid needs Catalonia for this reform to succeed. So, essentially, Puigdemont just needs to say “no” for the train to start rolling.

It’s way more complex than it seems. The Catalan extreme left, up to the last minute, was trying to convince Puigdemont to proclaim unconditional independence. At the same time, those six seconds left Catalan unionists predictably furious. Moderates for their part prefer to see a faint light at the end of the tunnel.

The problem is that even with discreet back channels in place, Madrid’s strategy is to ultimately force a fissure in the independentist coalition; secession inside Catalonia to prevent secession from Spain. So far, the fissure has been prevented by some members of the Catalonian Parliament signing a declaration of support for the – still non-existent – republic.

Scrap that constitution

The President of the Cantabria region, Miguel Ángel Revilla, sums it all up: Rajoy is to blame. Revilla worries that “50% of Catalans want to leave Spain. Four years ago, that was not the case.” He stresses how a “Catalan statute – approved by the Catalans and the Spanish Parliament – was impugned by the Constitutional court, so they had to be mad, right? It did not deal with independence, it was a pact, delineating a series of obligations.”

So the unwillingness of the Spanish government to talk, according to Revilla, is what led to the current impasse. No wonder; Rajoy is closely advised by former Prime Minister José María Aznar.

The extremely reactionary administration in place in Madrid could have defused the bomb even before the referendum, by mobilizing sectors of the working class in Catalonia whose first language is Spanish, not Catalan; many of these view the independence dossier as a “war of the elites”.

Madrid though opted for Franco-ist repression tactics. King Felipe VI had one chance to appeal for calm and reunite the nation; he chose to play Scaremonger-in-Chief. EU “leaders” stuck to platitudes, like Rothschild favorite Emmanuel Macron extolling his “profound” vision of an integrated Europe and Chancellor Angela Merkel abdicating from her role of Dispenser of Wisdom; after all, this is not Crimea.

The European Commission (EC), losing the scarce credibility it still possessed, sharply ignored its own “core values”; the rights of national minorities enshrined in Article 2 of the EU founding treaty, as well as Article 21 of its charter of fundamental rights.

Podemos has some decent ideas to “save Spanish democracy”.

Yet there seems to be only one sensible road map ahead.

1. Kick out the incompetent, nano-Franco administration, which does not want any dialogue; a tough call in a nation so viscerally conservative as Spain.


2. Explain to everyone in Catalonia, especially the different strands of the working class, what independence would mean in practice – something the current “leaders” are incapable of. Catalonia – one of the EU’s wealthiest regions – in or out of the EU? Trading in which currency? Without an army? Able to manage a neighboring hostile power (Spain) and not recognized by France?


3. Launch a comprehensive national dialogue process to reform the outdated 1978 constitution – privileging a modern, federal charter, emphasizing more consensus among regions, and considering the concerns of at least 25% of hardcore independentists in Catalonia.

None of this seems to be on the cards – and that’s why the real tragedy is only beginning. Spain is already broken – and there will be no turning back.

Calling Rosa Luxemburg

The temptation to strike parallels with Europe a century ago are strong. What about adapting Rosa Luxemburg’s latest, searing essay before she was assassinated in January 1919; “You stupid henchmen! Your ‘order’ is built on sand.” At the same time Rosa Luxemburg warned the Left about the petty-bourgeois nationalisms emerging after the collapse of the Habsburgs (the exception was Czechoslovakia.)

“Catalanism” – which sprang up in the 19^th century – is a different beast though. The Barcelona-Madrid fissure is based on deep economic/fiscal reasons, amplified by the dire consequences of the financial crisis in Spain since 2008. Catalonia’s nationalism is not narrow-minded but inclusive, largely open to The Other – from other parts of Spain and abroad.

The intractability of the political problem is that Catalonia – the most European of all Spanish regions and historically in favor of republicanism and federalism – contests the very essence of the Spanish system. To scrap this outdated constitution – written immediately after Franco’s demise and drenched in amnesty for Franco-ists – is as important as self-determination. To say that the Bourbons face a legitimacy crisis is a major understatement.

Madrid’s actions on Referendum Repression Day – led by a Franco-ist partisan of torture, infamous General Bum-Bum – could not but revive the memory of Catalonia as the key anarchist/republican hub during the Spanish Civil War; the Civil Guard in itself represents the memory of Francoism. It’s understandable how separatists prefer to discard the historic/ financial heavy load when they see the impossibility of a true modernization of Spain.

The prospect of an implosion of this current Spanish state – with repercussions everywhere from the Basque country to Scotland –   should be driving Europeans east and west to think hard about all the interconnections between city, territory, nation, state and (European) union; a healthy exercise in political economy thinking.

Instead, once again, we have total Brussels paralysis. There’s no plan B. Worse; there’s no political will, as some Greens at the European Parliament have remarked. No wonder, with EU “leaders” as mediocre as the Juncker/Tusk bunch, and the number two of the EC, Dutch jurist Frans Timmermans, saying that “sometimes the rule of law must be preserved by a proportionate use of force.”

Brussels, facing the prospect of a region that may leave in one go not only the EU but also the euro, is incapable to see that the Spanish fracture is a microcosm of the nation-state fracture inside the EU. The Juncker/Tusk unconditional support for nano-Franco cannot but be interpreted all across progressive European circles for what it is; what good could possibly emerge out of “mediation” by these non-entities? It’s civil society, in tandem, in Spain and Catalonia, that should be the mediators. One wonders if they’re up to the task.

Catalan Police Ordered To Close And Occupy Polling Stations To Stop Vote Going Ahead

The Catalan Police (Mossos) have been ordered by the Public Prosecutor"s Office to close and occupy all premises that will or might be used as polling stations in the region to prevent them from being used for Sunday"s independence referendum vote, suspended by the Constitutional Court.

The Public Prosecutor"s Office confirmed to The Spain Report on Wednesday morning that the document and the orders it contains were genuine.

Officers must close and cordon off the centres until 9 p.m. on Sunday evening and make it clear that the police cordon is not to be broken, warning people they are liable to criminal prosecution if they do so.

They have been ordered to remove anyone already in the polling stations, and seize any items being used for the vote, "especially ballot boxes, computers, ballot papers and election documents and propaganda".

 

They may repeat the removals and seizures if people try to break the police line during the day.

The cordons and closures must be in place by Saturday, September 30.

Mossos officers must report any infractions of the polling station orders, and may request local police, National Police and Civil Guard back up if they believe they need it.

The Catalan Police must also prevent people designated as polling officers from being able to access the premises designated as polling stations, which is due to happen from 7:30 a.m. on Sunday.

Finally, the Mossos have been told to prevent the vote taking place anywhere within 100 metres of the designated premises, "including on public streets".

Catalan Police chiefs are worried about the public order and manpower requirements stemming from the order, Spanish media reported.

The prosecutor says that despite efforts by the central government to disable the logistical preparation for the vote, Catalan leaders are insisting some kind of vote will take place on Sunday.

Also on Wednesday morning, the Catalan First Minister unilaterally called a meeting of the Catalan Security Council, a regional policing body. That move was rejected by the Home Office two days ago.

A meeting of senior police chiefs in the region is taking place this morning. The prosecutor"s office in Catalonia told The Spain Report that the polling station issue would likely be on the agenda.

Finally, one comment on this report caught our eye and seemed to clarify much of what is occurrring...

Spain is Holding Catalonia Hostage

Via The Daily Bell

Imagine you are in a book club. For a few years, it was great, you liked the books and the discussion with members. But then, the club started reading steamy romance novels that you just weren’t into and would not entertain your opinions for other material. Finally, when you can’t relate to the discussion on the texts anymore, you decide to leave the club.

But then, the book club President locks the door and tells you to sit down. You will remain in the club, the other members tell you, whether you like it or not. You will read the romance novels which don’t interest you, and you will contribute your monthly dues, by force if necessary.

As ridiculous as that would be, that is the attitude of Spain, and many other countries, when it comes to regions wishing to secede and form their own country. Why should regions be kept in the larger “club” against their will?

Catalonia is a region in Spain bordering France and the Mediterranean Sea, that has been independent at times in history. The modern movement for independence began almost 100 years ago, but the region settled for autonomy instead of full-fledged independence.

In 2006, Catalonia drafted a revised Statute of Autonomy, many parts of which were ruled unconstitutional by the Spanish high court. This sparked calls for Catalonia to entirely secede from Spain, instead of settling for “autonomy.”

Spain however, doesn’t even want the people of Catalonia to talk about or think about secession. The former President of Catalonia defied the Spanish government when he held a referendum to form a new country of Catalonia. 35% of eligible voters turned out in the region with a population of 7.5 million.

The informal vote was opposed by Mariano Rajoy’s government in Madrid and was held in defiance of Constitutional Court ruling five days ahead of the poll that the referendum was illegal. Around 2.3 million people in Catalonia cast a ballot in the plebiscite with 80.7 percent voting for independence.

The non-binding referendum was held in 2014, and because of it, earlier this year Spain barred former Catalan President Artur Mas from holding public office for two years and fined him €36,500.

Prime Minister of Spain Mariano Rajoy has called Catalonia’s efforts to break away “an unacceptable attempt to blackmail the state.” Spain’s constitution makes it illegal for regions to seek independence.

Yet the government of Catalonia remains defiant, promising the people a binding referendum for September of this year in which voters can decide if Catalonia will break away from Spain.

Spain will attempt to prevent that referendum from being held, even though polls consistently indicate 80% of Catalonians want to be allowed to vote on the issue.

Just in case Spain is successful in obstructing the people from voicing their will, the Catalan government has drafted a bill that would declare its independence from Spain, officially making Catalonia its own country.

The bill would appropriate Catalonia-related cases from the national courts to the newly formed Catalan courts, which would dismiss all pending cases against people charged with independence-related illegal activities.

Catalonia has a functioning government and has a plan to implement their own courts upon becoming independent. The people at least want the freedom to choose independence, and many polls and former referendums indicate a majority would vote in favor of forming a new country that better aligns with their unique culture and interests.

The population of 7.5 million would place the newly formed country right in the middle of worldwide countries by population, larger than Denmark and Ireland, slightly smaller than Israel and Switzerland.

But the Spanish government is holding on tooth and nail, determined to preserve their power.

Why Is Spain So Adamant that Catalonia Stays?

Federal governments are always weary of their power being challenged, and historically countries seek to gain territory, not lose it.

Even amidst the Catalan movement towards independence, Spain is attempting to bring Gibraltar under the rule of their economically weak country, even though Gibraltar has not been part of Spain since 1713. Gibraltar, technically a British Territory, considers Spain a hostile and threatening neighbor. Spain cannot even keep its own house in order, yet seeks to assert sovereignty over more independent regions.

One main reason that Spain does not want to lose Catalonia is that it is a wealthy region, that forms a solid tax base for the Spanish government to slurp up.

Catalan independence would mean the loss of up to 30 per cent of Spain’s gross domestic product and Minister of the Economy Luis de Guindos insisted that is something the government “will never let happen”.

It is a tax farm, and Spain simply wishes to remain in control over the appropriated resources of the Catalans, instead of allowing their wealth to remain in the region, and be spent how they choose through a smaller more responsive government.

The defense minister has called the Catalan government’s attempts at secession “a grave threat to coexistence and constitutional order.”

But this is silly. Coexistence is exactly what Catalonia is after, as well as their own constitutional order which has been prevented by the government in Spain. Coexistence means letting people go their own ways if they wish. Coexistence means you leave people alone who wish to be left alone.

And by constitutional order, what he really means is dictatorial order, as the Spanish government is fighting as hard as possible from allowing Catalans to follow their own constitution, run their own affairs, and be free to choose their own system.

And with Spain’s attempt to silence any dissent, even charging those in favor of independence with crimes, it is no wonder why people would want to separate from a regime so hostile to free speech, and freedom of expression.

It is unjust and an affront to freedom to keep people in an organization against their will. Allowing secession supports the idea that when the larger group no longer represents your will, you have the right to peacefully remove yourself from their ranks.

Decentralizing government is a good thing, as it gives people more control over their lives, their communities, and their futures. Let’s hope we are only seeing the very beginning of this secessionist movement to give people more control over their government and experiment with better political systems.

Police Escort South Korea's Former President Out Of Her Official Residence

South Korea"s disgraced president struck a defiant tone on Friday morning when a constitutional court unanimously upheld the decision to impeach Park Guen-hye: she did not appear in court and a spokesman said she would not be making any comment nor would she leave the  presidential Blue House residence on Friday. "For now, Park is not leaving the Blue House today," Blue House spokesman Kim Dong Jo told Reuters. That changed on Sunday, when Park Geun-hye, 65, who has become South Korea"s first democratically elected leader to be forced from office, left the official presidential Blue House residence on Sunday in a motorcade of fast-driving black cars, flanked by police motorbikes.

And, like Friday, the former president who now faces life as a private citizen and the possibility of prison time, was likewise defiant upon arriving at her private home in the Gangnam district of the capital, Seoul: "I feel sorry that I could not finish the mandate given to me as president," a spokesman for Park, member of parliament Min Kyung-wook, quoted her as saying. "It will take time, but I believe the truth will be revealed," Park said in her first public comments since her dismissal.

It was not the first time the former president has had to leave the Blue House compound of traditional-style buildings at the foot of a hill in Seoul.

In 1979, after a nine-day funeral following the assassination of her father, the young Park left the Blue House with her siblings for a family home. She had been acting first lady after her mother was shot and killed in an earlier failed assassination attempt on her father. Now, having lost presidential immunity, she could face criminal charges over bribery, extortion and abuse of power in connection with allegations of conspiring with her friend, Choi Soon-sil. Both women denied wrongdoing.

In a departure from her recent stubborn refusal to accept responsibility for the events that culminated with Friday"s Constitutional Court on Friday upholding a parliamentary impeachment vote over an influence-peddling scandal that has shaken the political and business elite, without blaming outside intervention, like for example Russian hacking.

"I take responsibility for the outcome of all this," Min quoted her as saying according to Reuters.

A snap presidential election will be held by May 9. Her dismissal followed months of political paralysis and turmoil over the scandal that also landed the head of the Samsung conglomerate in jail and facing trial. The crisis has coincided with rising tension with North Korea and anger from China over the deployment in South Korea of a U.S. missile-defense system.

Meanwhile, throngs of flag-waving supporters crowded the street outside Park"s home as she arrived there about 30 minutes after leaving the presidential palace. She waved through her car"s tinted window as it inched its way down the street, with security men in suits walking alongside. She stepped out smiling, the public"s first glimpse of her since her dismissal, and greeted supporters.

Supporters of the now former president gather at her Seoul residence on Sunday

According to Korea Herald, loyalists to former President Park Geun-hye flocked nearby her private residence in southern Seoul late Sunday, seeking to bid farewell to the state chief who faced an earlier-than-expected end of her tenure upon impeachment.

Park Geun-hye smiles to her supporters in front of her old home in Samseong-dong

The residential neighborhood in Samseong-dong was crammed with hundreds awaiting the retreat of the former president to her home. In addition to some 800 police officers who kept guard at the scene, a considerable number of Park supporters, including ranking pro-Park lawmakers, former secretariat chiefs and members of the anti-impeachment civic group, were present. Police said over 1,000 gathered.  A smiling Park shook hands and exchanged greetings with her former aides and political allies in front of her home, as her followers shouted messages of encouragement.

Rep. Cho Won-jin, a former public affairs strategist of the party and ranking Park aide, was the first to arrive at the scene earlier in the afternoon. Reps. Yoon Sang-hyun, Kim Jin-tae and Park Dae-chul, who have participated in the Taegeukgi rallies to oppose Park‘s impeachment, were also there. “The intention is not so much to offer consolation, but to bid farewell,” said one of the pro-Park lawmakers.

While lawmakers and former secretariat officials retained composure, preparing for Park’s arrival, members of Parksamo -- the official group of Park’s supporters -- let out enraged responses. After Cheong Wa Dae confirmed Park’s departure at 7:16 p.m., some 800 Park supporters became restless, shouting out the former president’s name and cursing the Constitutional Court for its impeachment ruling.

* * *

Elsewhere, the liberal politician likely to become the next president, Moon Jae-in, promised to work for justice and common sense. "We still have a long way to go. We have to make this a country of justice, of common sense through regime change," Moon, who advocates reconciliation with North Korea, told a news conference.

Moon is leading in opinion polls, which show South Koreans are likely to throw out the conservatives after nearly a decade in power and turn to a liberal leader. Moon called on Park to publicly accept the court ruling, which she now appears to have done, however the transition did not come without a tragedy. On Friday, two Park supporters were killed as they tried to break through police lines outside the court, shortly after the verdict. One was believed to have had a heart attack and the other died as the Park supporters attacked police buses. A third, a man aged 74, suffered a heart attack and died on Saturday.

Thousands of Park"s opponents celebrated in Seoul on Saturday, where they have been gathering every weekend for months, and demanded that she be arrested. The former president"s conservative supporters also took to the streets not far away, though fewer in number. Police were out in force but there was no trouble.

The chaos in South Korea"s political establishment comes at a sensitive time for the nation: the country"s northern neighbor, North Korea, has been acting in an increasingly irrational fashion in recent weeks, and according to the Predata-Beyond Parallel think tank the odds of a North Korean WMD attack in the next month have topped 60%.

 

Another ballistic missile launch could provoke an armed response by both Japan and China, and potentially see the deployment of the controversial THAAD missiles recently deployed by the US in South Korea which could further escalate the tension in the region.

South Korea's President Has Been Removed From Office After Court Upholds Impeachment

South Korea"s constitutional court has voted unanimously, 8-0, to uphold the impeachment of President Park Guen-hye, removing her from office after a 92-day leadership crisis and triggering a presidential election in the weeks to come. A snap election my be held within 60 days.

The ruling, which was announced by the court"s acting chief and televised live, made Park the nation"s first democratically elected leader to be ousted. She was impeached by parliament on Dec. 9 on charges of letting a close friend meddle in state affairs, colluding with her to extort money from conglomerates, and neglecting her duties during a 2014 ferry sinking that killed more than 300.

The court"s decision strips Park of her immunity from criminal prosecution, which will force her to undergo interrogation by prosecutors over her alleged crimes.

President Park Geun-hye (R) and Lee Jung-mi, acting chief of the Constitutional Court

"The Constitutional Court"s decision is equivalent to demanding legal accountability for President Park"s failure to properly run state affairs," said Yang Seung-ham, honorary professor at Seoul"s Yonsei University. "Now the public should accept the ruling."

The nation has been sharply divided along ideological and generational lines since the scandal broke in October, pushing millions of people into the streets to rally for or against the impeachment.

Park"s problems began in October, when revelations emerged about the influence Park"s confidante and adviser Choi Soon-sil had over the President. Choi is currently on trial for abuse of power and fraud. What followed later was 5 months of at times sheer chaos (see full timeline below) culminating with today"s decision.

Local media and opposition parties had accused Choi of abusing her relationship with the president to force companies to donate millions of dollars to foundations she runs. She denies all charges against her.

Hundreds of thousands of South Koreans braved the brutally cold winter temperatures to take to the streets of Seoul and call for Park"s ouster.

In a brief televised apology however, Park made it clear that she had no intentions of resigning. In December, the National Assembly voted 234 to 56 to impeach her.

Park was impeached in December after being accused of corruption. She is alleged to have let her close confidante Choi Soon Sil meddle in state affairs and conspired with her to extort money from major companies including Samsung.

Local pundits cited by Yonhap said the court"s decision demonstrated that South Korea"s democratic system is firmly in place. "We have undergone a process of resolving considerable conflict and differences in a predictable manner through legal procedures stipulated in the Constitution," said Park Myoung-kyu, a sociology professor at Seoul National University. "Now is the time to calm down and turn (the conflict) into policy debates and arguments."

The president"s supporters and detractors rallied outside the court as police officers and police buses were deployed to prevent a possible clash.

* * *

Below is the full timeline of the Park scandal:

October

24 - South Korean cable TV network JTBC reports that Park"s longtime friend Choi edited some of the president"s speeches. Prosecutors were already investigating claims that Choi had used her relationship with Park to raise funds for two foundations.
25 - Park apologizes on national television, saying Choi had access to dozens of presidential speeches before they were made public.
29 - Thousands of anti-government protesters gather in Seoul, calling for Park"s resignation. Organizers estimate the crowd at 20,000; police put attendance at 9,000.
31 - As Choi arrives at the prosecutors" offices, following a two-month stay in Germany, she apologizes, saying she has committed "an unpardonable crime." Late that night, prosecutors place Choi in emergency detention.

November

1 - Prosecutors raid the offices of eight banks. Choi is suspected, among other things, of getting preferential treatment from local banks for loans.
2 - Park nominates a new prime minister, Kim Byong Joon, a member of an opposition party, in a bid to quell the controversy.
3 - A South Korean district court issues an arrest warrant for Choi. Kim, the prime minister-designate, says Park could be investigated, saying, "Everyone is equal before the law."
4 - Park again apologizes on TV, saying she will cooperate in the investigation.
5 - Thousands of protesters take to the streets of Seoul to demand Park"s resignation. Organizers say about 100,000 people participate; police put the number at 40,000.
6 - Prosecutors issue warrants for two of Park"s former aides, AnChong Bum and Jeong Ho Seong, who both resigned the previous week. Prosecutors continue to question Choi.
8 - Prosecutors search the offices of electronics giant Samsung. Park says she will withdraw her nominee for prime minister.
12 - The biggest protest yet takes place near the presidential palace in Seoul. Organizers say 500,000 people participate; police put the number at 190,000. Protests are planned in 40 other cities in South Korea and abroad.
13 - Prosecutors say they plan to question Park.
17 - South Korea"s parliament passes a bill to open up an independent enquiry into Park"s friendship with Choi. The legislation seeks 60 investigators and a special prosecutor to lead the case.
19 - Protestors again gather in Seoul.
20 - Prosecutors say Park is likely to have played a role in the corruption scandal but that they cannot indict her, as the country"s constitution guarantees the president immunity "except in cases of insurrection or treason."
21 - The country"s largest opposition party says it will take steps to begin impeachment proceedings against Park.

December

1 - South Korea"s ruling party pushes for Park to resign in April, saying presidential elections planned for the end of 2017 could be brought forward to June.
2 - The country"s three opposition parties say they will vote December 9 on impeachment, even if Park announces a plan to resign. Park plans to meet with members of her own ruling party over the weekend.
3 - Hundreds of thousands of demonstrators march within 100 metres of Park"s official residence.
6 - Park says she won"t immediately resign if impeached. Five thousand South Koreans file a lawsuit demanding compensation from Park for mental suffering caused by the scandal.
9 - Lawmakers including members of her own party vote to impeach Park
16 - In a 24-page document, Park"s lawyers argue that there is no legal foundation for her removal.
19 - Park"s influential friend Choi Soon Sil goes on trial on charges of abuse of authority and attempted fraud.

January

3 - The first open hearing in Park"s impeachment trial is held. As expected, she does not attend.

February

17 - Samsung heir Lee Jae Yong is arrested over bribery allegations linked to the corruption scandal.

March

9 - Lee denies bribing Park and Choi on the first day of his trial
10 - The Constitional Court upholds Park"s impeachment

Dow finally breaks 20k for the first time

With live Real-time Market Coverage on FinancialJuice.com

HEADLINES

• Dow finally breaks 20k for the first time


• US President Trump: Strong Mexico economy good for US


• Trump: Border wall building will begin "in months" --ABC


• Trump calls for "major investigation" into voter fraud


• US House Price Index (MoM) Nov: 0.50% (est 0.40%; rev prev 0.30%)


• Italian court modifies election law, could open way for 2017 vote


• June 2017 touted as the date for early Italian elections --Rtrs


• Euro "could fail", says man tipped as US ambassador to EU --BBC


• ECB research: ECB policy working, but with a greater lag


• EU Negotiator: Further disintegration of EU possible post-Brexit


• BOE: Corporate-Bond Buying Program May End Ahead of Schedule


• US Crude Oil Inventory 25-Jan: +2840K (est +2500K; prev +2347K)


• US Distillate Inventory 25-Jan: +76K (est -1000K; prev -968K)


• US Gasoline Inventory 25-Jan: +6796K (est +1000K; prev +5951K)


• Cushing Inventory 25-Jan: -284K (est -400K; prev -1274K)


• Fitch: Global Ratings Outlook Weaker Than Last Year


• PBOC Yi: China doesn"t meet FX manipulator criteria --SCMP

COMMENTARY

Dow breaks 20k

Donald Trump’s early moves on infrastructure and deregulation have reignited investor confidence in the US economy, propelling stocks into record territory and sending the Dow Jones Industrial Average above 20,000 for the first time. Mr Trump was quick to note the milestone for the blue-chip average, tweeting “Great!” with the hashtag “#Dow20K”. But bullish sentiment was not isolated to the Dow, an idiosyncratic index which tracks just 30 popular stocks whose performance is driven by companies with the highest share prices. The broader S&P 500 benchmark also hit new highs, helped by rallies in economically-sensitive sectors directly affected by Mr Trump’s first executive actions — including requiring that domestic steel be used for US pipelines and building a wall along the Mexican border. (FT)

The Hurdles to Building a Border Wall

The building of a border-length wall between the United States and Mexico is a campaign promise that U.S. President Donald Trump continues to nurture. But the construction of such an edifice is no small matter, assuming Congress would even approve or agree to fund the endeavor in the first place. Not only must the Trump administration deal with internal complications — legal opposition, issues of land ownership and physical geography — but there is also the matter of U.S.-Mexico relations and the fluid, adaptive nature of the migrant flow from South America. (Stratfor)

Early Italian Elections?

Italian politics poses the biggest single tail risk to the stability of the Eurozone in 2017, as it did in the second half of last year. The tail risk has probably become a little fatter today with a decision by Italy’s Constitutional Court that might pave the way for early elections in Italy, possibly in June. As one of his major reforms while he was prime minister, Matteo Renzi had introduced an election law that automatically awards a majority of seats to the strongest single party in a two-round voting process for the lower house of parliament. The Constitutional Court today struck down one provision, namely that of a potential second round if no party reaches 40% in the first round. However, the Court left the remainder of the “Italicum” law standing, adding that the election law could be applied immediately. A perceived need to change the election law had been one of the major arguments against holding early elections in Italy. Courtesy of the court decision, Italy now has a valid election law: the strongest party gets a majority in the lower house if it receives at least 40% of the vote. Otherwise, it’s a normal distribution of seats without a bonus, requiring parties to form a coalition in order to govern. Of course, the major political parties could still decide to change the law anyway – and take as much time for that as they want. A desire to bring the election law for the lower house of parliament more in line with the different rules for the upper house of parliament could well be an argument to adjust the law even after today’s court decision. (Berenberg, continue)

UK GDP Preview (Q416, P)

Analysts are looking for a relatively stable 0.5% quarter-on-quarter rise versus 0.6% prior, and a 2.1% year-on-year increase from the 2.2% seen in Q3. This is the first full-quarter growth release following the EU referendum and IHS highlights “that the preliminary release will be based on the output side of the economy; and it is clear that growth will once again have been highly dependent - possibly even totally dependent - on the services sector.” Morgan Stanley also expect growth to be driven by services. Looking ahead to the second estimate, the bank foresees “strong consumer spending growth. However, we continue to expect the consumer to slow as inflation rises and we expect sluggish investment growth in light of approaching Brexit.” While the economy has been resilient in the immediate aftermath of the referendum, many expect the economy to slow as it encounters fresh headwinds, alongside the development of Brexit negotiations. An early indication of such slowing came in December’s retail sales data, although much of the suffering was owing to the heavily discounted prices evident in November, and despite foreigners bargain-hunting in London on the back of the softer sterling. (Livesquawk)

Redefining a "special relationship": Trump and May to talk trade

Trade will dominate the first talks between the new leaders of the United States and Britain this week, with both hoping commitments to a future deal will redefine their "special relationship" in a new world order. For British Prime Minister Theresa May - who will be the first foreign leader to meet new U.S. President Donald Trump - even a simple promise to deepen trade ties between the two countries could strengthen her hand in divorce talks with the European Union. Trump might use the meeting to go some way to winning concessions from Britain and bolster his vision of the United States exporting its way to prosperity. (Rtrs)

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