Germany Warns Against "Silvio the Savior" (And That May Backfire); Fake Horse Race Odds Get Around Blackouts

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Italians head to the polls on February 24-25 to replace the technocrat government of prime minister Mario Monti.

Pier Luigi Bersani, who heads the centre-left Bene Commune (Common Good) coalition was considered a shoo-in a few short weeks ago, at least in the Chamber (the lower house of parliament).

It’s all up in the air now as Silvio Berlusconi, head of the centre-right Il Popolo della Libertà (the People of Freedom) has staged a massive rally in the polls (now blacked out). Berlusconi has been on a rampage lately blaming Germany and Chancellor Angela Merkel for the unemployment problems in Italy. It’s a populist message that is resonating well with voters.

Beppe Grillo’s Movimento 5 Stelle (Five Star Movement) has been largely ignored in the Italian press, yet Grillo has been wildly popular at rallies. Grillo has a chance to come in second, and I would not be surprised by a first place finish.

Mario Monti, who heads the centrist Con Monti per l’Italia (With Monti for Italy) coalition, is running a very distant 4th.

“Fare per Fermare il Declino” (literally “Act to Stop the Decline”, acronym FiD), is a primarily Libertarian party founded less than a year ago but until a recent stumble had been gaining enough steam to possibly overtake Monti.

For further analysis of FiD and the other parties, please see European Reader Offers Insights on Upcoming Italian Election

Poll Blackouts

Officially, pollsters cannot post poll results in a blackout period before the election. That blackout period started February 9. Here is a snapshot of the polls on February 8.

Those results are misleading because they do not include undecided voters, and the undecided vote is a whopping 20-25 percent!

With such little difference between Berlusconi and Bersani, and with huge rallies for Beppe Grillo and Berlusconi, any outcome is possible. Will Grillo take votes from Berlusconi or Bersani (or both). If enough of both I could even envision a win. If he takes more votes from Bersani, then Berlusconi is likely to win.

From my experience, late deciders break in a massive way for one candidate or the other (and in the US election I predicted for Obama). Here, it appears against Bersani (to who is more uncertain).

Fake Horse Race Odds Get Around Blackouts

Adding more confusion rather than clarity, Yahoo!News reports Fake horse racing blog dodges Italy’s election polls blackout

A blog appears to have found a way around a publishing ban on polls in the two weeks before the vote by writing up the results of pretend “underground horse races”, which appear to reflect each party’s standing.

On the final day polls could be published before the blackout fell, bloggers Andrea Mancia and Simone Bressan posted “The illegal races return!” on their site Notapolitica.it setting out the main “stables” and “jockeys” competing.

In line with the last published official polls, the winning horses of Tuesday’s “San Nicola Racetrack” came from the “Bien Comun” stables, a thinly disguised name for the centre-left “Italia Bene Comune” coalition.

The centre right of former Prime Minister Silvio Berlusconi was shown coming in just 3.5 “seconds” behind.  Using a mix of puns and French, Notapolitica.it renders centre-left leader Pier Luigi Bersani as jockey “Pier le Smacchiateur” and Mario Monti as “Mario de la Montaigne”. Berlusconi is dubbed “Burlesque”.

Horses representing Beppe Grillo’s 5-Star Movement are referred to as “stellar”, while the names of races allude to different pollsters. “San Walter Giuliano Racecourse”, for example, appears to refer to research group SWG.

It is difficult to say if those are official polling results or fictional. Assuming the polls are accurate (not an assumption I am ready to make), it is still difficult to know how undecided voters were handled.

Germany Warns Against Berlusconi

Of potentially more importance, Berlin Warns Italians against Berlusconi

Here are a few examples from the story.

German Finance Minister Wolfgang Schäuble reportedly said (but later denied) “Silvio Berlusconi may be an effective campaign strategist, but my advice to the Italians is not to make the same mistake again by re-electing him.”

Polenz, a senior member of Chancellor Angela Merkel’s Christian Democrats, said: “Italy needs political leaders who stand for the future. Berlusconi is certainly not one of them.”

One Italian bank even went so far this week as to issue a report arguing that a Berlusconi election would almost certainly force the country to apply for emergency bailout aid from the EU. Mediobanca, Italy’s largest investment bank, wrote that “a last-minute Berlusconi victory would scare the market sufficiently to put pressure on the spread.”

“Silvio the Savior”

In Italy, the opposite is happening. Spiegel reports Berlusconi’s Faithful: ‘Only Silvio Can Save Italy’

Adoration of Berlusconi in Italy remains widespread. In the parallel universe occupied by his followers, there is no room for doubt about Berlusconi and lines are clearly drawn. Silvio is good and the others are bad.

These fans gather at his speeches, like the Saturday rally in Palermo, where thousands crowded into the venerable Teatro Politeama. There were women in long fur coats and fine gentlemen in three-piece suits. Dock workers like Ferrante squeezed with them through the entrance, everyone pushing and shoving each other like adolescents at a rock concert. The hundreds who didn’t make it in must stand outside.

Silvio the Savior

Fans of the 76-year-old ex-premier see him as more than just a beacon of hope. “Berlusconi will now start a revolution,” says teacher Marinella Romano. She confesses “I have always loved Silvio.” Donatella Catalano, a friendly retiree, gushes, “He stands for everything that is good in the world.” The unemployed Ferrante says that “only Silvio can save Italy, he will bring us much good.”

Fully a quarter of Italians are prepared to vote for Berlusconi again. It is an astounding degree of homage paid to man who faces allegations of abuse of power and bribery; who faces the scandal surrounding the underage escort Karima el-Marough, alias Ruby Rubacuori; who has been blasted for blatantly misogynistic comments; and who broke many promises as prime minister. Instead, the opposition, left-leaning judges and even the Germans are blamed for all that is not right with Italy.

“It was Merkel who toppled him,” says retiree Catalano, referring to the German chancellor. She then turns to her neighbor and says: “It’s better not to tell the man anything, because the Germans always write negatively about Berlusconi.” Another voice yells: “First World War II and now attacks against Berlusconi!”

The comments are not surprising. In almost every campaign speech, Berlusconi rails against Germany. “Should we continue to allow Germany to dictate policies that ruin Italy?” he calls out. “Nooooo!” scream his followers.

Election Predictions

It’s difficult to judge from this side of the Atlantic, but things do not look good for a viable center-left coalition. At best, Bersani will win the Chamber and lose the Senate. That would likely result in a hung parliament.

Anti-German sentiment in Italy is high already. The entrance of German politicians into the battle may fuel that sentiment in a major way.

It is conceivable “Silvio the Savior” pulls off a stunning upset win in both the Chamber and Senate, but a Senate victory would still require a coalition (no party will come close to a majority).

In theory, Movimento 5 Stelle and Silvio Berlusconi could form a nice anti-Euro coalition and put the Euro to a vote, but given the anti-political party platform of Movimento 5 Stelle it’s hard to see that coalition forming.

Indeed it may be difficult if not impossible for any party to form a Senate coalition if Monti’s party does poorly enough (as I expect it will).

The most likely outcome once again is a hung parliament, and the next most likely outcome may very well be a return of Silvio Berlusconi (rather than a weak center left coalition of some sort that most seem to expect).

Regardless, Berlusconi is no savior (nor is there one to be found in the entire group). There are no good outcomes for Italy.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Germany Warns Against "Silvio the Savior" (And That May Backfire); Fake Horse Race Odds Get Around Blackouts

Nestlé Recall and Mafia Connections: 5 Things You Should Know As Horse Meat Scandal Grows

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By now you’ve likely heard about the horse meat scandal that is rocking Europe. As far as food scandals go, this one is intriguing. Of course, this is not the first time we’ve learned that the meat we buy may not be everything we thought it was. Remember “pink slime”? The only good news here is that, so far, it doesn’t seem to be an imminent health threat, although it does raise some very alarming questions. 

As food politics expert Marion Nestle wrote, “The unfolding drama around Europe’s horsemeat scandal is a case study in food politics and the politics of cultural identity. Cultural identity? They (other people) eat horsemeat. We don’t.”

As Nestle explains, “Most Americans say they won’t eat horsemeat, are appalled by the very idea, and oppose raising horses for food, selling their meat, and slaughtering horses for any reason.” Horse meat, however, is eaten in numerous countries around the world like China, Japan and Indonesia, as well as countries in Europe, including France and Switzerland. 

It’s one thing to knowingly eat horse meat; it’s quite another to have it slipped into your food. This opens a pandora’s box of questions about the food we"re buying. For starters: What else is in there (donkey and pig, and the list may grow)? What does it reveal about food safety and our complex food chain? Who is responsible for duping consumers, and how did they get away with it?

It turns out there is a lot we can learn from Europe’s surplus of horse burgers.

1. The Mighty Fall

The most recent news surfacing today is that Nestlé, one of the largest food companies in the world, has now been entangled in the scandal. The New York Timesreports that Nestlé is pulling two products sold in Italy and Spain: Buitoni Beef Ravioli and Beef Tortellini, as well as Lasagnes à la Bolognaise Gourmandes sold to catering companies in France.  

Nestlé is just the latest in the list of Europe’s top food companies involved. The story first broke in the UK and Ireland when major supermarket chains Tesco and Aldi were found to be selling beef products that contained horse meat. It spun from there. AdAge reports, “Burger King binned thousands of Whoppers and Angus Burgers, which were sourced from the same Irish beef supplier, Silvercrest, and Findus ‘beef’ lasagna was found to contain 100% horse meat.” 

Silvercrest has been fingered, as well as Liffey Meats in Ireland and Dalepak in Yorkshire, accordingto Felicity Lawrence of the Guardian:

Silvercrest and Dalepak are both subsidiaries of ABP Food Group, one of the largest beef processors in Europe.”

… Huge blocks of frozen meat at a cold store in Northern Ireland, Freeza Foods, which had been quarantined by officials suspicious of its labelling and state of packaging, were found to contain 80% horse. 

Other top food companies were implicated when the scandal hit France (more on that soon), but the presence of large food companies at the heart of the issue is troubling. While bigger companies are often able to offer products cheaper than small and local stores, some may be questioning if the savings are really worth it if consumers are getting duped. A look at the complex supply chain raises even more fears.

Lawrence writes:

Supermarket buyers and big brands have been driving down prices, seeking special offers on meat products as consumers cut back on their spending in the face of recession. The squeeze on prices has come at a time when manufacturers" costs have been soaring. Beef prices have been at record highs as has the price of grain needed to feed cattle. The cost of energy, heavily used in industrial processing and to fuel centralised distribution chains, has also soared. There has been a mistmatch between the cost of real beef and what companies are prepared to pay.

So, are we really shocked?

2. A Tangled Web

Horse meat has ended up in so-called beef products to varying degrees — some have been found to contain traces of horse DNA, which may have been the result of processing plants not properly cleaning equipment. And some products have been found to contain upward of 80 to 100 percent horse meat, which signals a much larger problem. 

Getting to the bottom of how this came about has involved a lot of finger pointing. In Ireland, the ABP Food Group blamed supplies in Netherlands and Spain, and later Poland. “Five weeks into the scandal and the links in the Irish chain have still not been fully established,” writes the Guardian"s Lawrence.” But this gets even more interesting in France, as she explains:  

Comigel had subcontracted its ready meal production to a factory in Luxembourg, Tavola. It was supplied with meat by a company called Spanghero. Spanghero had bought meat from a Dutch fraudster already convicted of passing horse off as beef, Jan Fasen.

The Dutch trader ran a company called Draap, which spelled backwards is paard or Dutch for horse. It was registered in Cyprus in 2008, with an offshore vehicle in the British Virgin Islands. It emerged during Fasen"s trial in Holland that he had supplied French companies with horsemeat imported from South America and Mexico fraudulently labelled as Dutch and German “beef” going back to 2007.

The horsemeat found in the recent tests on ready meals exported from France was said to have been sourced by Draap from Romania. The Romanian government has said its meat was legally exported correctly labeled as horse. The French government said Spanghero was the first agent to stamp the horse as beef; Spanghero has denied doing so deliberately. Fasen says Spanghero and French manufacturers were in on the deception from the beginning.

It turns out there may be a whole lot more criminal to this case.

3. Trouble in Romania

It just so happens that Romania may have an excess of dead horses on its hands. John Lichfield of the Independent reports that a change in traffic rules is to blame:

Horse-drawn carts were a common form of transport for centuries in Romania, but hundreds of thousands of the animals are feared to have been sent to the abattoir after the change in road rules.

The law, which was passed six years ago but only enforced recently, also banned carts drawn by donkeys, leading to speculation among food-industry officials in France that some of the “horse meat” which has turned up on supermarket shelves in Britain, France and Sweden may, in fact, turn out to be donkey meat. “Horses have been banned from Romanian roads and millions of animals have been sent to the slaughterhouse,” said Jose Bove, a veteran campaigner for small farmers who is now vice-president of the European Parliament agriculture committee.

While the explanation of where some of the horse meat could have come from is straightforward, how it got to dinner plates is not. As Lichfield explains, “It came from abattoirs in Romania through a dealer in Cyprus working through another dealer in Holland to a meat plant in the south of France which sold it to a French-owned factory in Luxembourg which made it into frozen meals sold in supermarkets in 16 countries.”

4. Blame the Mafia

From here, the story just gets weirder. Jamie Doward reports for the Observer that organized international gangs are suspected of involvement in the scandal. Doward writes:

Experts within the horse slaughter industry have told the Observer there is evidence that both Polish and Italian mafia gangs are running multimillion-pound scams to substitute horsemeat for beef during food production. There are claims that vets and other officials working within abattoirs and food production plants are intimidated into signing off meat as beef when it is in fact cheaper alternatives such as pork or horse. …

“I"m concerned that this is an international criminal conspiracy here and we"ve really got to get to the bottom of it,” [Britain’s environment secretary Owen Paterson] said.

5. Rethinking Our Food

So, we found out that beef products may contain horse, and also pig, and possibly donkey, as well. What to do with that information? For some people, it means buying less meat or from different sources. Reuters reported that 60 percent of people it surveyed in the UK said they were turning to local butchers for their meat and 25 percent said they would buy different cuts instead of processed meat. 

AdAge reported that sales of frozen burgers dropped 40 percent in the beginning of February, while the meat-substitute Quorn saw a spike in sales of 10 percent. Emma Hall writes that, “More than two-thirds of British adults said they would be less likely to buy frozen meat products in the future.”  

The biggest effect so far has been a drop in public trust. But after countless food safety scandals over the years, some of them deadly, why do we trust a system that’s needlessly complex?

“The food and retail industries have become highly concentrated and globalized in recent decades,” Lawrence writes for the Guardian:

“A handful of key players dominate the beef processing and supermarket sectors across Europe. They have developed very long supply chains, particularly for their economy lines, which enable them to buy the ingredients for processed foods from wherever they are cheapest at any point, depending on exchange rates and prices on the global commodity markets. Networks of brokers, cold stores operators and subcontracted meat cutting plants have emerged to supply rapidly fluctuating orders ‘just in time.’ Management consultants KPMG estimate there are around 450 points at which the integrity of the chain can break down.”

That’s worth repeating — there are 450 places where something could go wrong before your food gets into your hands.

If there was ever a reason to eat more locally produced food and to know where your food comes from and who grows and processes it, this would be a damn good one because this extends far beyond just meat products, and far beyond Europe.

Tue, 02/19/2013 – 12:20  
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Nestlé Recall and Mafia Connections: 5 Things You Should Know As Horse Meat Scandal Grows