caused quite a backlash because the e.c.b. has no institutional jurisdiction to enforce policy making in an e.u. member state. it was judgment the judgment of the e.c.b. what was necessary in this absolutely dramatic circumstances where forty percent of the g.d.p. of the. attack one of. the berlusconi government implemented many of the measures proposed in that letter while at the same time secretly trying to introduce provisions to private eyes water. a proposal that italians had rejected in the referendum. the constitutional court intervened and said no you cannot reign should years. legal provisions been repealed as a result of. this calls to european commissioner olli rehn to write to mr berlusconi again asking for clarification. just. as a judge and a founder member as a judge of. italians who had already made up their own minds saw that sentence despite the outcomes of the referendum as an insult it also infringed upon an e.u. article demanding neutrality. if they. say yes yes. and there who are not mix is. going to do y

it was judgment the judgment of the e.c.b. what was necessary in this absolutely dramatic circumstances where forty percent of the g.d.p. of the. attack went to. the berlusconi government implemented many of the measures proposed in that letter while at the same time secretly trying to introduce provisions to private eyes water. a proposal that italians had rejected in the referendum. courts intervened and said no you cannot rachid years. legal provisions to repeal as a result of. this caused the european commissioner olli rehn to write to mr berlusconi again asking for clarification. just. as a judge of a founder member. at allianz who had already made up their own minds saw that sentence despite the outcomes of the referendum as an insult it also infringed upon an e.u. article demanding neutrality. that. says it. so yes it up with dummies you know scott just give this. and then who are not mixes. going to do your. group i mean is that funny that we're going to prevent. the exact city. you know locomotives you'll do up it don

there under leverage as compared to the federal reserve bank of new york or the bank of japan the e.c.b. is relatively on leveraged no i don't i don't agree the germans and the french are paying for everything they've had a defacto union in fiscal year we're going to spend that balance it on the e.c.b. buy another five fifteen trillion euros and they will go to your determined banks and the french banks and the dutch or all ultimately underpinning us one of the. bank itself the rumor is that it's a basket case that is going to explode going to go the way lehman brothers your thoughts a slow death painful dwindling death because of this is model that doesn't make sense anymore when the model well it was london based capital markets and investment banking with this time. a rump bank back in germany they don't have a banking business in germany so they have to figure out what they want to do with themselves same thing with citi i thought why don't we marry them this wonderful german american alliance but in both cases you have businesses that are big fund them selves off the markets they d

francine: do you think the e.c.b.ut the cycle or the german economy because of trade wars or are they looking at inflation? >> what they look at is much broader than it was 10 years ago. they are much more concerned about financial stability and have much better incorporation of financial stability and how they view the world and how they calibrate policy. they are worried about everything, now more so than 10 years ago for sure. francine: are they right to worry about everything or is there a danger they worry about what they should have worried about 10 years ago? >> it is a risk. they know it. there are plenty of people on the e.c.b. council that are going to be making the for getting back to normal spifment francine: thank you very much. bloomberg's editor for western europe. geoffrey stays with us. a reminder that u.s. bonds and stock markets are closed for independence day celebration. you can watch tonight we'll have exclusive coverage of the boston pops fireworks extraver ganza. some very famous names performi

there under leverage as compared to the federal reserve bank of new york or the bank of japan the e.c.b. is relatively on leveraged no i don't i don't agree the germans and the french are paying for everything they've had a defacto union in fiscal year going to spend that founded on the e.c.b. by now there are five fifteen trillion euros and they well what are your determined banks and the french banks and the dutch or all ultimately underpinning us or one of the. bank itself the rumor is that it's a basket case that is going to explode at another way lehman brothers your thoughts a slow death painful dwindling death because of this was model that doesn't make sense anymore but in the model well it was london based capital markets and investment banking with this time. a rump bank back in germany they don't have a banking business in germany so they have to figure out what they want to do with themselves same thing with citi i thought why don't we marry them this wonderful german american alliance but in both cases you have businesses that are big fund them selves off the markets they d

is the european central bank overstepped its power as part of its quantitative easing program the e.c.b. has carried out a large bond germany is now asked the european court of justice to decide whether the measure would. is intended to stimulate the economy of eurozone states breached the city's monetary policy mandate has purchased government bonds worth two point three trillion euros. the european union representatives have been meeting with foreign ministers of six balkan states in london to discuss their prospects of joining the e.u. the countries include bosnia and herzegovina serbia kosovo and macedonia albania and montenegro by joining the e.u. they hope to generate greater wealth before the western balkans can hope to benefit from europe's economic strength they've got some homework to do. all in all the west balkans are quite a way along the path to membership according to sources in brussels they've made progress on the rule of law and the independence of the judiciary the legislative process is also being brought in line with the european union. but even membership also mean

as the european central bank overstepped its powers as part of its quantitative easing program the e.c.b. has carried out a lobster tail bone purchases germany as the european court of justice to decide whether the measure which was intended to stimulate the economy of eurozone states breached. on a matter of policy not that. that's all from a child of an update for you in the next hour and watching about. climate change. environmental projects. globalization. biodiversity species conservation exploitation. human rights displacement. the global and current local are. global three thousand next on d w. climate change. waist length. isn't it time for good. eco africa people and projects that are changing no one fireman for the better is up to us to make a difference let's inspire each other. going to be environment magazine. on d w. a who do you think is going to be no joke. who matches the scores. in eighteen soccer world cup on t w news. neko case in germany to learn german. published in the. why not learn with him online on the mobile and free to suffer from the w e learning course niko

in october to avoid competitive currency devaluations druggy went on to say several members of the e.c.b. governing council quote expressed concern that this was broader than simply the exchange rate it was about the overall status of international relations right now . in the us aid trump appointee is pushing a major change to the legal process for settling alleged labor law violations peter robb general counsel of the national labor relations board or n l r b outlined plans to affectively demote the regional directors who resolve about eighty five percent of n.l.r.b. cases by placing them in a new smaller tier of civil servants who could overrule the regional managers the changes expected to tilt the system toward ruling in favor of employers. all right let's head back now to davos with our children for reaction to the president's speech let's get parts thoughts on this as well as those who are in attendance. monella present trump speech was warmly received by a polite audience most of the time was spent on what the president himself describes as being a cheerleader for the united stat

example higher interest rates here in the euro zone to happen but very interesting they had of the e.c.b. draggy was announcing that this could be a possibility after summer next year in two thousand and nineteen also the european central bank announced that they are going to cut their bond purchasing program that will expire by the end of the year from now thirty billion euros so months to only fifteen billion euros a month on the other hand also chief draggy was saying that he thinks that the meeting yesterday with donald trump and john clune was a success but he is still warning that protectionism remains to be a prominent key factor that also could hurt the economy. in frankfurt thank you. there's been a dramatic fall in profits a dime of the german carmakers second quarter revenues were down twenty nine percent on the year that's even though the maker of mercedes benz sold more cars and trucks. partly to blame for the profit shortfall this comes off the general motors also reported a big drop in profitability in europe dharnas also dealing with a major recall of diesel cars. as ment

fed raising two more times, e.c.b. not doing nothing for a year. problematic, and markets. is does k the question that divergence widen or narrow in the second half of the year. we bet it narrows, looking at the economic surprise index as a eading indicator, and europe's economic surprise tariff fell off a cliff is and coming back, turned down. there's an opportunity in the second half of the year, if we the trade and immigration issues, if we move and rd europe looks good earnings in europe - the euro disturbance from a headwind to a trade wind. the dollar from a tail wind to a headwind. and as we talked about earlier, surprises up and down will drive the markets in the second half. is it to spirit economics and politics, aren't economics?s driving a lot of populism, a lot of workers don't feel there's enough for them, there's not the growth. austerity in 2018. are there moves. italy looks looks they'll write check. is there moves to free i'm more an countries to do basic reform. austerity is beingeesed. talking about not raising interest rates un

house the european central bank overstepped its paws as part of its quantitative easing program the e.c.b. has carried out large scale bond purchases germany has now lost the european court of justice to decide whether the measure which was intended to stimulate the economy of eurozone states reached the e.c.b. as monitor policy mandates. purchased government bonds worth two point three trillion years. a jury in california will have to decide whether monsanto's we kill a round up is to blame for the cancer a forty six year old groundskeeper is the first trial in which round up is said to have caused cancer claim repeatedly denied by the chemical company in a dispute by a number of independent scientific studies if successful or legal challenge could open floodgates of the case and against monsanto which was recently acquired by german chemicals heavyweight. thought paris has been suffering from a distinctly first world problem lately the growing flow of visiting millionaires have not been able to find suitable hotel accommodation in the french capital those poor souls can breathe a sigh o

leaving its key interest rate unchanged that keeps it at a record low often zero percent above the e.c.b. said it will be hovering its monthly bond to buyback program that's. about it was that dramatic and then we had a dramatic fall in profits at dime not because it's an ng season the german carmakers said second quarter revenues were down twenty nine percent on the year that is even though the maker of mostly to spend sold cars and trucks dima said trade tariffs were partly to blame for the profit shortfall this comes after german motors also reported a big drop in profitability in europe dima is also dealing with a major recall of diesel cars. and facebook the shares took a beating after the social media giant reported the user numbers driven you haven't been rising as quickly as expected shares fell more than twenty percent in after hours trading in new york following the news erasing one hundred billion dollars in capital of address new was up forty two percent in the second quarter but costs continue to rise as facebook focuses on tightening security and improving content following

isn't very closely if we might get a hint or an indication of when we could see the change off the e.c.b. monetary policy drag you also shares general assessment how he sees the current inflation situation in the euro zone he always has this target that inflation rate needs to be always here at the level of about two per cent so yeah no big surprises are expected for still well we're listening very carefully you'll be there and you will bring us up to date no doubt than you quote in frankfurt thank you. and facebook shares took a beating after the social media giant reported that use the numbers under revenue haven't been rising as quickly as expected shares fell more than twenty percent in after hours trading in new york following the news that raising one hundred billion dollars in capital driving you was up forty two percent in the second quarter of course continue to rise as facebook focuses on tightening security and improving content following a series of scandals the company says it has two point two billion active monthly users. and here's a reminder all the top stories we're fol

e.c.b.icy divergence. you have the seven rate hikes in the u.s. e.c.b. is still in a quantitative easing cycle even though we anticipate that end big the end of the year. i think you'll see a normalization of yields in europe, which will be negfive for -- negative for sovereign ate holders in europe. michael: the world is flat, yield curves generally are flat. i'm not certain about an inversion. i worry more about the pace of rate hikes than the shape of the curve. in particular, the reason that inversions typically result or have been predictive in terms of recession is that it reflects an aggressive monetary policy that may not be consistent with the long-term economic health. so you have negative sentiment on the long end othey have curve. the curve inverts. and it tevends to constrict growth and over time. but not for a period of about 12 to 18 months result in a recession. david: the allocation toward that country is the biggest risk. where does allocation come from? michael: global inv

is it coming down presumably because of the disparity between the fed raising and the e.c.b. not raising and this the market telling us enough already? cameron: so this is tensionly pricing the spread in euro dollars which is the market's estimate of three month libor between the end of 2019 and the end of 2020. it's basically gone to zero with the implication saying the market saying the fed won't raise rates in 2020. alix: maybe not raise but cut. cameron: i wouldn't read too much into it. alix: it could be either. cameron: the fed will say we keep going 2020, and the wild curve is there are sort of market based recession prediction models counter where you use the old curve to predict when the next reception comes. it's an emergent consensus, the next recession will start sometime in 2020. if that happens will the fed raise rates? almost certainly and almost certainly not. i think going to flat tells you we're moving towards that sort of tipping point. now, if we see evidence emerge the rest of the world is starting to pick up again and/or we see a resteepening in the 210'

the remit of the e.c.b. is clear price stability it uses the base rate as it's too weak to deliver that and it's been lowering the base rate steadily ever since the financial crisis down to zero savers are left by the wayside but countries with high levels of debt such as greece are able to get their hands on cheap money so to banks in southern europe. the cheap money is supposed to fuel growth by buying government bonds the cd has pumped additional trillions of years into the markets otherwise the system would face potential collapse the price of all this is a deluge of money the money has to go somewhere into shares and real estate which continue to rise in price the result is a massive concentration of wealth right at the top. bill gates the world's richest man has a fortune of sixty five billion euros that the market value of his shares to compare the total value of all of the world's cash is less than one hundred times that amount five trillion years. the value of zero goods and services created every y

the remit of the e.c.b. it's clear price stability excuse is the base rate as it's too weak to deliver that and it's been lowering the base rate steadily ever since the financial crisis down to zero savers are left by the wayside but countries with high levels of debt such as greece are able to get their hands on cheap money so too can ailing banks in southern europe. the cheap money is supposed to fuel growth by buying government bonds the z.t. has pumped additional trillions of years into the markets otherwise the system would face potential collapse the price of all this is a deluge of money the money has to go somewhere into shares and real estate which continue to rise in price the result is a massive concentration of wealth right at the top. bill gates the world's richest man has a fortune of sixty five billion euros that the market value of his shares to compare the total value of all of the world's cash is less than one hundred times that amount five trillion years. the value of zero goods and servic

the e.c.b. is on the runway.nd ded of the queer, and it's a matter of time -- of the year. matter of time. the policy is set for an emergency. it's not an emergency. we are in the early stages. yields.negative francine: is there a danger that downturn in the us. we can't deal with the us downturn. >> that's the risk. but the context is important. set for the is emergency, that is what a negative interest rate is. thick of the eurozone, with a by the weakness, it's above friends rates of growth. tom: above trend rates of growth for europe, you are suggesting. nick: it is. issue is the fund growth rate is not high. it. where is nick: one and a quarter perz. 1.75. is significantly above trend. om: it will be interesting to see. francine, what i find ascinating by the second half of going into the second half is he number of ambiguities, mysteries that we have like the movement and currencies, some of these to r.b.c. is one example. there in bates out july. francine: there certainly is. - a lot of the markets want to

as for the e.c.b. i wouldn't look for major changes.verybody is getting a bit nervous whether ecb or the bank of japan they are definitely running behind the schedule. they should be normalizing. they probably are late in that. even our fed was late. finally i think everybody especially after steve brought up what is going on with regard to lamar alexander the canadian dollar having a good session. looks like it will close at the best level since 13th of june. if congress thinks that they need more input into this they can do it. it would be strange for mcdonald's to say nobody makes a good hamburger anymore. i would be very surprised if they get the legislation through before trump is done with some type of deal. >> we'll see what happens. thank you for weighing in. still ahead on the show, former treasury lew joins us. >> coming up after this break, former u.k. prime minister here to talk trade, brexit and more. we are back in a couple minutes. stop fearing your alarm clock... with new*! zzzquil pure zzzs. a drug-free blend of botanic

when it was a sovereign debt crisis in southern europe, the issue was is there the willingness of the e.c.b., i.e., is there the willingness of germany to sort this out and to back it up, to back up this southern europe situation? now those lines never converged. sovereign debt of the southern european countries, especially italy, had continued to widen out. they were getting an sfwrate subsidy for being connectled to germany, but they didn't have to reduce their debt. now the question is not the willingness, but the capacity to do it. one thing about the u.s., we print the money we borrow in. japan prints the money they borrow in. here is a lot of risk to printing the money you borrow in. printing too much money is not going off a cliff. in europe, everybody borrows in a fournette currency. italy doesn't print euros. it is always more worrisome how one would deal with that, and there are rules that the countries in europe use to protect their fiscal policy. i would say that issue and immigration are the big risks to the whole construct. john: you see italy as the biggest sovereign threat?

example higher interest rates here in the euro zone to happen but very interesting they had of the e.c.b. drag you was announcing that this could be a possibility after summer next year in two thousand and nineteen also the european central bank announce that they are going to cut their bond purchasing program that will expire by the end of the year from now thirty billion euro so months to only fifteen billion euros a month on the other hand also chief dr hugh was saying that he thinks that the meeting yesterday with donald trump and john clune was a success but he is still warning that protectionism remains to be a prominent key factor that also could hurt the economy. in frankfurt thank you. and as daniels said damn love post a disappointing results today german comicon said second quarter earnings were down twenty nine percent on the year that's even though the maker of maceda spend sold more cars and trucks donna said terrorists are partly to blame for the profit shortfall in europe dan was also dealing with a major recall of his diesel cars. or wednesday's deal between u.s. preside

to be firmly located inside the european union frankfurt germany its financial capital home to the e.c.b. and with all the uncertainties surrounding breck said london is much less attractive now cities like dublin paris are drawing some of that business but frankfurt is leading the pack so far twenty four international banks are opening new offices there. b. and b. is not being transparent with its pricing so say the european commission the convenience of holiday rental service abyan bay has been a hit with customers earning the family must one hundred million dollars in profit last year but the e.u. says it must be clear about extra fees and charges on top of the rental price. at first glance a b. and b. can look like a real bargain that is until additional charges are added at the end of the booking process charges for services like cleaning and b. and b.'s agency fee the european commission says the procedure misleads consumers welcome to the coming together this is. going on be aligned and conditions with. us and be transparent on the presentation of prices and i will review. does no

has the european central bank overstepped its powers as part of his quantitative easing program the e.c.b. has carried out large scale bond purchases germany has asked the european court of justice to decide that of the measure which was intended to stimulate the economy of floors and states briefs the monetary policy mandate the lender has purchased government bonds worth two point three trillion nerves. meanwhile china is making efforts to build its ties for the european partners german car maker b.m.w. is the latest to team up the china's tech giant by do it hopes to use by just technology in itself driving cars. german chancellor angela merkel and chinese premier league kitchen accompanied b.m.w. c.e.o. harold krueger to lynn's former temple fairport to see a demonstration of by dues of polo autonomous driving technology the chinese tech company last year opened its autonomous driving program to third parties a move it hopes will accelerate development and help it compete with u.s. firms tesla and google project way moe. than misty thought weaver nothing beats seeing for yourself what