This past week saw continued upheaval in a number of important parts of the globe. On the Brexit frontier in the United Kingdom, the Scottish First Minister Nicola Sturgeon began calling for yet another Scottish referendum on independence even as British Prime Minister Theresa May finally won her hard fought approval for the right to carry out the Brexit negotiations she will officially trigger at the end of March.

Over on the European continent, the Netherlands with allies Denmark, Germany, and Austria squared off against Turkish strongman President Erdogan exactly as the Dutch prepared to go to the polls to vote for the politicians who will decide the future of their EU membership. Ultra -nationalist and severely anti-EU politician Geert Wilders is tipped to perform extremely well, coming in either first or second in the Wednesday, March 15th elections.

On the banking frontier, oldest bank in the world and third largest bank in Italy Monte del Paschi di Siena sought approval from the European Union to sell off its troubled book of failed loans. The bank is eager to begin a nearly $30 billion sale of its loan portfolio officially valued at four times that amount so it can gain recourse to Italian state aid from the 21 billion euro Italian bank support fund.

In Japan, the Japanese economy again grew at a slower pace than analysts had forecast at only 1.2 percent versus the 1.6 percent anticipated. While it is at least growing somewhat, it is not expanding fast enough to make a material difference in the dangerous levels of Japanese debt versus the country’s nearly flat GDP.

As the American Secretary of Defence General Mattis ominously declared at his confirmation hearings in January, the World Order is under the “greatest attack since World War II.” Gold is the hedging insurance and protection your IRA portfolio needs to protect it.

Scottish First Minister Sturgeon Calls for Another Referendum Complicating PM May’s Brexit Plans

After a long and winding road, the British Prime Minister Theresa May has at last overcome her determined opposition and gained the final approval of Parliament to proceed with Brexit on her terms. She is working on triggering Article 50 from the Lisbon Treaty before Parliament recesses March 31st, but after the March 25th 60 year celebration of the Treaty of Rome that gave rise to the European Union. Two officials intimate to her plans said she will formally announce the beginning of Brexit the last week of March.

This will initiate two years of Brexit talks with the EU which will either end in a mutually agreeable deal to the Prime Minister and European Commission, or with Britain simply walking away from Europe entirely. Thanks to the House of Commons voting to overturn the House of Lords’ amendments from earlier in the last weeks, she has gained full capabilities to negotiate as she sees fit to make it  a “successful Brexit.”

May now has the two difficult challenges on her hands of withdrawing Great Britain from the European Union on good financial and trade terms while navigating the latest thorny issue in her plans, a renewed effort for Scotland to regain its independence from the United Kingdom.

 

Even though the Scottish independence issue was “settled for the generation” in 2014 according to former Prime Minister David Cameron, the Scottish First Minister Nicola Sturgeon sees the withdrawal from the EU as her latest opportunity to recover the independence Scotland formally surrendered to the United Kingdom over three hundred years ago in the Act of Union.

Sturgeon announced Monday that she is beginning her legal process and plans to hold yet another referendum no later than the spring of 2019. Her reasons are that Scotland voted overwhelmingly in favor of remaining in the EU and she is determined to keep access to the common market whatever the remainder of the United Kingdom does. Sturgeon told reporters in the Scottish provincial capital of Edinburgh:

The Scottish government sought compromise repeatedly with London but was “met with a brick wall of intransigence. I will now take the steps necessary so Scotland will have the choice at the end of this process.”

Sturgeon’s timetable sets out a vote for the proposed secession from the U.K. for as soon as fall of 2018 but no later than spring of 2019. Her reasoning in this is to try to declare independence from the rest of Great Britain before the country leaves the European Union. This is flawed logic in her effort to remain within the block, as the European Commission has previously flatly stated that an independent Scotland would be a new country in Europe and would have to go through the usual three years negotiation process to enter the European Union.

Nicola Sturgeon Photo Courtesy of The Business Times

Despite the fact that she will be upending stability and financial security in Scotland with her proposed referendum which May must agree to in order for it to occur at all, Sturgeon is pressing ahead with her dreams of Scottish independence that she has harbored since she was 15. This means that Britain now has two years of difficult negotiations with the rest of the EU to contend with as well as the likely Scottish referendum.

Whatever happens with these two momentous scenarios, one thing at least is clear. The rules of departure in the EU treaties say that Britain must be fully out of the common market block in two years, regardless of whether it reaches any deal or no deal with the EU Commission.

Netherlands Versus Turkey Standoff Strengthening Support for Nationalist Leader Wilders in Wednesday’s Dutch Elections

The weekend, just before the Dutch elections that will determine the future of the Netherlands in the EU, a veritable war of words erupted between the founding EU member country and Turkey, threatening over 400 years of good relations between the two states. It all began when the Dutch government refused the request of a Turkish government minister to speak at a Rotterdam rally. This led to Turkish President Recep Tayyip Erdogan accusing the Dutch government of behaving like Nazis.

Before the weekend was over, Denmark, Austria, and Germany had joined together in solidarity to ban any Turkish government ministers from speaking at rallies to sizeable Turkish citizen minorities within their own countries. Most importantly for Dutch politics ahead of the election, it has strengthened the hand of Dutch ultra-nationalist and anti-EU politician Geert Wilders who represents the rising populism in Europe. He opined at a debate with co-front runner Prime Minister Mark Rutte:

“We must directly expel the Turkish ambassador and the rest of his staff from the country, otherwise we accept that we are being insulted.”

While three different opinion polls released Monday showed the home stretch political scenario in the Netherlands is stable, only two of the three showed Liberal Party leader Mark Rutte to be leading the anti-European Union Freedom Party that Geert Wilders leads. Wilders is sure to be either the largest or second largest party in the new Parliament, regardless of whether or not he is able to form a governing coalition. The influence his party is sure to have an impact on future policies of the Netherlands in upcoming EU struggles and debates.

Monte Paschi Bank Seeking Quick Approval to Sell Off Its Bad Assets

Troubled Italian lender Banca Monte dei Paschi di Siena is pushing towards an accelerated sell off of its nearly $30 billion (28 billion euros) in bad loans. They are only waiting on the EU authorities to give their tacit approval to its latest business proposal to commence with the auction. The bank has announced it wishes to sell off the entire book of loans in a single lot. They plan to allow competing bidders a month to consider the debt book before they accept auction-styled offers. It is estimated the bank will receive a lower amount than one-quarter of its gross book value. In any case, it will represent a major blow for the venerable bank to survive.

The struggling Italian lending institution is writing up its new business plan which the European Commission will have to approve in order for the bank to be able to access a 21 billion euros bailout aid package from the Italian government. The government bailout became critical for the bank to survive after they failed to attract the necessary anchoring private shareholders back in December 2016.

This is critical to watch as the Italian banking sector is massive and too big for even the ECB to effectively bail out should other major Italian banks fail to survive the Monte Paschi debacle. This is why you should invest in gold as the best way to protect yourself from the ongoing geopolitical turmoil, financial instability, and times of financial crisis in the world.

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