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Shorting euro means taking on Pentagon and ECB

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That is a hard blow to French efforts to enlist Germany in its project of an “autonomous European security structure.”

The French media also see more trouble for their young and enthusiastic president. Berlin apparently is not ready to cooperate in what it considers to be new, expensive and unnecessary layers of European bureaucracy to implement proposals of euro area reforms submitted by the French government last year.

Does that mean that the European Union and the euro area will soon be falling apart?

Not at all. The anti-EU forces are in retreat everywhere. Even the erstwhile Euro-skeptics among the key contenders for power in Italy’s elections on March 4 are now all pro-European, the only qualification being that they would not submit to any German hectoring.

How about the economic and financial developments? Do they offer reasonable euro-asset shorting bets?

I don’t see that either. Here is why.

The monetary union’s growth dynamics have rarely been better since the euro was adopted as a single currency on January 1, 1999. In the third quarter of last year, the euro area GDP grew at an annual rate of 2.6 percent. The only growth rates of 3 percent, or slightly above, were recorded in 2006 and 2007, but that will probably be matched when the data for the euro area’s fourth quarter get in.

The employment picture looks good, too. The euro area jobless rate eased to 8.7 percent at the end of 2017, down from a 12 percent peak in 2013, with shortages of skilled labor noted in Germany and France.

Problems of public finances? Yes, gross government liabilities in the euro area were estimated at 107 percent of GDP last year. That is very far from the objective of 60 percent of GDP, but that is still sharply down from 112 percent of GDP observed in 2014. Apart from that, high-debt countries like Greece, Italy and Portugal are running primary budget surpluses (budget balances before interest charges on public debt) ranging from 2.4 percent of GDP (Italy) to 6.7 percent of GDP (Greece) — which means that debt liabilities are stabilizing on a declining trend.

All those high-debt euro area countries are under pressure to balance their budgets over the next two years. I believe most of them will do it because, at the moment, only Spain and France are running deficits of more than 2 percent of GDP.

How about contingent liabilities from banking sector problems? As far as I know, speculations about serious difficulties on that score are focusing on only one euro area country, where government bailouts, if allowed by the euro area regulations, could trigger public debt issues.

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U.S. rejoins Paris climate accord

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President Joe Biden signs executive orders in the Oval Office of the White House in Washington, after his inauguration as the 46th President of the United States, U.S., January 20, 2021.

Tom Brenner | Reuters

President Joe Biden signed an executive order to rejoin the U.S. into the Paris climate agreement on Wednesday, his first major action to tackle global warming as he brings the largest team of climate change experts ever into the White House.

The Biden administration also intends to cancel the permit for the construction of the Keystone XL pipeline from Canada to the U.S. and sign additional orders in the coming days to reverse several of former President Donald Trump’s actions weakening environmental protections.

Biden vows to move quickly on climate change action, and his inclusion of scientists throughout the government marks the beginning of a major policy reversal following four years of the Trump administration’s weakening of climate rules in favor of fossil fuel producers.

Nearly every country in the world is part of the Paris Agreement, the landmark nonbinding accord among nations to reduce their carbon emissions. Trump withdrew the U.S. from the agreement in 2017.

Mitchell Bernard, president of the Natural Resources Defense Council, said Biden’s order to rejoin the accord makes the U.S. part of the global solution for climate change rather than part of the problem.

“This is swift and decisive action,” Bernard said in a statement. “It sets the stage for the comprehensive action we need to confront the climate crisis now, while there’s still time to act.”

With a slim Democratic majority in the Senate, Biden could potentially achieve large parts of his ambitious climate agenda, including a $2 trillion economic plan to push forward a clean-energy transition, cut carbon emissions from the electricity sector by 2035 and achieve net-zero emissions by 2050.

During his first few months in office, Biden is expected to sign a wave of executive orders to address climate change, including conserving 30% of America’s land and waters by 2030, protecting the Arctic National Wildlife Refuge from drilling, and restoring and elevating the role of science in government decisions.

Some legal actions on climate will take longer, including the administration’s plan to reverse a slew of Trump’s environmental rollbacks on rules governing clean air and water and planet-warming emissions. The Trump administration reversed more than 100 environmental rules in four years, according to research from Columbia Law School.

More from CNBC Environment:
UN warns nations of major economic damage without more action on climate change
2020 was one of the hottest years on record, tied with 2016
Control of Senate allows Democrats to act on Biden’s climate change agenda

“From Paris to Keystone to protecting gray wolves, these huge first moves from President Biden show he’s serious about stopping the climate and extinction crises,” Kieran Suckling, executive director of the Center for Biological Diversity, said in a statement. “These strong steps must be the start of a furious race to avert catastrophe.”

The next major U.N. climate summit will take place in Glasgow, Scotland, in November. Countries in the agreement will give updated emissions targets for the next decade.

A goal of the agreement is to keep the global temperature rise well below 2 degrees Celsius, or 3.6 degrees Fahrenheit, compared with preindustrial levels. The Earth is set to warm up by 1.5 C, or 2.7 F, over the next two decades.

Robert Schuwerk, executive director for North America at Carbon Tracker, said rejoining the accord signals to global markets that the U.S. will make tackling climate change a priority, but added that it’s only a part of what the administration must do to lower its emissions.

The U.S. is the world’s second-largest emitter of greenhouse gases behind China. It’s expected to have an updated climate target and a concrete plan to reduce emissions from the power and energy sector.

“Rejoining is just table stakes,” said John Morton, who was President Barack Obama’s energy and climate director at the National Security Council. “The hard work of putting the country on a course to becoming net zero emissions by mid-century begins now.”

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New mandates, a close White House tie and big challenges ahead

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China sanctions Pompeo, O’Brien, Azar and other Trump administration officials

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U.S. Secretary of State Mike Pompeo speaks during a press conference at the Great Hall of the People on June 14, 2018 in Beijing, China.

Lintao Zhang | Getty Images

WASHINGTON – The Chinese government slapped sanctions on former Secretary of State Mike Pompeo, former National Security Adviser Robert O’Brien and former trade adviser Peter Navarro, along with other members of the Trump administration Wednesday.

“Over the past few years, some anti-China politicians in the United States, out of their selfish political interests and prejudice and hatred against China and showing no regard for the interests of the Chinese and American people, have planned, promoted and executed a series of crazy moves which have gravely interfered in China’s internal affairs, undermined China’s interests, offended the Chinese people, and seriously disrupted China-U.S. relations,” wrote the Ministry of Foreign Affairs in a statement.

“China has decided to sanction 28 persons who have seriously violated China’s sovereignty and who have been mainly responsible for such U.S. moves on China-related issues,” the statement also said.

The Chinese government also named former deputy national security adviser Matthew Pottinger, former Health and Human Services Secretary Alex Azar, former U.S. Ambassador to the United Nations Kelly Craft, assistant Secretary of State for East Asian and Pacific Affairs David Stilwell and under Secretary of State for Economic Growth, Energy, and the Environment Keith Krach.

Former national security adviser John Bolton and Stephen Bannon were also sanctioned Wednesday.

“These individuals and their immediate family members are prohibited from entering the mainland, Hong Kong and Macao of China. They and companies and institutions associated with them are also restricted from doing business with China,” wrote the Ministry of Foreign Affairs in a statement.

US President Donald Trump (L) and China’s President Xi Jinping shake hands at a press conference following their meeting outside the Great Hall of the People in Beijing.

Artyom Ivanov | TASS | Getty Images

The crumbling relationship between Washington and Beijing intensified under the Trump administration following an attempt from the world’s two largest economies to mend trade relations.

Chinese Foreign Ministry spokeswoman Hua has previously said the Trump administration “is pressing the accelerator to trash China-U.S. relations.”

“Certain U.S. politicians are so irresponsible that they will say whatever needs to be said to make China a target,” she added last summer.

Her comments followed a blistering speech by then-U.S. Attorney General Bill Barr in which he accused the Chinese government of human rights abuses, espionage and economic blitzkrieg.

“The People’s Republic of China is now engaged in an economic blitzkrieg—an aggressive, orchestrated, whole-of-government campaign to seize the commanding heights of the global economy and to surpass the United States as the world’s preeminent superpower,” Barr said during a July 16 speech.

In June, O’Brien slammed China for a laundry list of offenses before saying that “the days of American passivity and naivety regarding the People’s Republic of China are over.”

Pompeo, who has previously described Huawei and other Chinese state-backed businesses as “Trojan horses for Chinese intelligence.” In July, Pompeo announced that the U.S. was looking at banning TikTok as well as other Chinese social media apps, citing national security concerns.

The Trump administration has also squarely placed blame on China for the deadly health crisis caused by the coronavirus

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