Global Economic Quiet Ahead of the Post U.S. Election Storm
While the media world is abuzz with last night’s Presidential debate, I’d like to cut through the noise and present you with two truly staggering facts that need to be kept in mind as the backdrop for the US Presidential Election
Fact #1: EU leaders have stated point blank that they were asked to keep things quiet until after the election.
Regardless of your party affiliation, social views or the like, we have to ask ourselves “what was promised in return?”
If you’ve been reading me for some time, you know by now that the EU is in massive trouble. Spain is currently drawing over €400 billion from the ECB.
Let’s put this number in perspective… in June before Spain requested a €100 billion bailout, the country was drawing only €300 billion from the ECB.
Since that time and now, the ECB has promised to provide unlimited bond buying… and even Germany has indicated it would be open to some sort of a Spanish bailout…
And yet, Spain is now borrowing even MORE than it was in June.
This is not progress in any way… if anything it indicates that things are worsening in the EU’s financial system at a staggering pace. The powers that be are keeping things calm until after the election… at which time there will be absolute hell to pay.
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Fact #2: China is facing a severe downturn if not outright collapse.
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Europe and China combined account for 34% of the world’s GDP. Throw in the US which has re-entered a recession and 55% of the globe’s GDP is in contraction.
And everyone is waiting on November 6 to see how this will pan out.
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** The Recent Collapse In Business Confidence Is Stunning
** Sales stumbles raise fresh worry for corporate America
THIS IS HUGE: Eurozone Bank Supervisor Plan Found To be “Illegal”
While we have largely resumed ignoring the non-newsflow out of Europe, as it has reverted back to one made up on the fly lie after another, or just simple rumor and political talking point innuendo in the most recent attempt to get hedge funds starved for yield (and chasing year end performance) to pursue every and any piece of Italian and Spanish debt (at least the until euphoria ends and the selling on fundamentals resumes) the latest development from the FT bears noting as it has major implications for Europe’s make it up as you go along “recovery.” According to the FT: “A plan to create a single eurozone banking supervisor is illegal, according to a secret legal opinion for EU finance ministers that deals a further blow to a reform deemed vital to solving the bloc’s debt crisis. A paper from the EU Council’s top legal adviser, obtained by the Financial Times, argues the plan goes “beyond the powers” permitted under law to change governance rules at the European Central Bank.” The punchline: “The legal service concludes that without altering EU treaties it would be impossible to give a bank supervision board within the ECB any formal decision-making powers as suggested in the blueprint drawn up by the European Commission.”
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Larry Summers: Global Economy in Danger Zone
Economies around the world are in trouble, says Harvard economist Lawrence Summers, who previously was a top adviser to President Barack Obama.
“The U.S. still peers over a fiscal cliff, Europe staggers forward trying to prevent crises King Canute-style with no compelling growth strategy and Japan remains stagnant,” Summers writes in the Financial Times.
“The BRIC countries [Brazil, Russia, India and China], meanwhile, are each unhappy stories in their own way.”
**The Official Economic Indicators Are Showing Early Signs Of Contraction
Greeks launch two days of protest against new austerity cuts
Greeks opposing a new round of austerity cuts on Wednesday began a two-day round of strikes and protests timed to pressurise EU leaders ahead of a summit later this week.
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GSEE has called its members to protest on Thursday to block “measures that wipe out both society and the economy”.
Civil servants are joining the mobilisation and the association of Greek traders has also called for a general store shutdown on Thursday.
“The drastic fall in incomes, outrageous over-taxation and a major drop in demand are destroying businesses and jobs,” the traders’ association said.
