The Dutch economy shrank by 1.1pc in the third quarter amid a deep housing slump, and even Austria has begun to succumb. Finland’s economy has shrunk by 1pc over the last year.
“Recession comes as no surprise and it is going to get worse next year,” said Desmond Supple from Nomura. “Europe has imposed dusted-off policies from the 1930s and they are driving peripheral countries towards depression,” he said.
“We are seeing [...]
IMF Fears ‘Credit Shock’ In Spain
The International Monetary Fund has issued a veiled warning that Spanish bond spreads could surge to a record 7.5pc and push the country into a deeper crisis if premier Mariano Rajoy continues to drag his feet on a bail-out request.
The fund said sovereign debt woes were spilling into the broader Spanish economy, risking a “pernicious feedback loop” for private companies. The danger is another bout [...]
Bank of America said it expects a “powerful short squeeze” in risk assets as speculative funds unwind positions, led by a rebound in battered bank stocks and Club Med bonds. The euro would surge 10pc to $1.40 against the US dollar after dipping first to $1.20 in the immediate panic.
The benign outcome assumes that the European Central Bank steps in with massive support, backed by the US Federal Reserve, [...]
By Ambrose Evans-Pritchard
Another vast pledge to save the euro, another chance lost to break the hold of Europe’s austerity mystics and force a shift in strategic direction.
“We’re north of a trillion dollars,” said Christine Lagarde, the International Monetary Fund’s queen bee. Kudos to her for netting such sums in her Louis Vuitton handbag but what exactly does this achieve, given that Europe remains bent on committing “economic suicide” — in the [...]
Mohamed El-Erian, PIMCO’s chief executive, said Portugal will need a second rescue as the original package of €78bn (£65bn) falls short, setting off a political storm over EU rescue costs.
“Unfortunately, that is how it will be. It will make the financial markets nervous because they are worried about a participation of the private sector,” he told Der Spiegel over the weekend.
German finance minister Wolfgang Schäuble insists that Greece is a [...]
Uploaded by CapitalAccount on Feb 15, 2012
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Europe is shrinking, at least the economy is. Italy sinks into recession as the eurozone contracts for the first time since the second quarter of 2009. Today was supposed to be a meeting of EU Finance ministers to push through the bailout of Papademos’ technocrat led government in Greece. This decision cam after the Greek parliament already passed brutal new austerity measures and privatization [...]
by Clive Hale from View from the Bridge
Stop The (Printing) Press!…. If Only We Could
Hands up anyone who is surprised that the Bank of England has added another £50 billion to the quantitative easing pot? The same hands will also believe that the Greeks have agreed terms for the next bail out tranche with the Troika (the European Union, the IMF and the European Central Bank). This ongoing epic odyssey of [...]
• Europe ‘in recession’ – and could take global economy with it
• OECD: Britain will slip into ‘modest recession’, demands QE
• UK unemployment ‘will hit 9.1pc’ in 2013, homelessness to rise
• IMF ‘preparing Italy and Spain rescue funds’ – markets rally
• Obama to meet euro chiefs Barroso, Van Rompuy today
• Japanese fund drops risky European bonds
13.16 To read their Economic Outlook, you’d think the OECD have spent Sunday afternoon at Tate [...]
Europe’s scorched-earth policies have begun in earnest. The inherent flaws of monetary union have created a crisis of such gravity that EU leaders now feel authorized to topple two elected governments.
As I long feared, the flood of cheap credit into Southern Europe and the slow death of Club Med industry by currency asphyxiation have together created such a dangerous situation for world finance that informed opinion is willing to turn [...]
Italy’s borrowing costs have hit new euro-era record highs this morning. 10-year Italian government bonds are now yielding more than 6.6%, With Bloomberg Warning That The Country Is Heading Down The Same Path Taken By Greece, Portugal And Ireland.
By way of comparison, Germany is able to borrow for 10 years at 1.76% (a paltry return for investors, given that eurozone inflation is currently running above 3%. But then, traders have made [...]
On a very slow trading day, some big picture observations from Russ Certo of Gleacher:
On The Linkage Between Politics And Markets
Good afternoon. The S&P 500 slid for a sixth straight week, its longest swoon since July 2008. The Dow closed below 12,000 for the first time since March, and 6.7% off the highs and has been bantering around all day today. Declining stocks outpaced advancing [...]
Some sober data on who are the top 5 contributors to IMF:
#1 – US with $106 bil
#2 – Japan with $102 bil
Distant #3 – China with $48 bil
Distant #4 – Germany with $39 bil
Distant #5 – France with $28 bil
A â€œWho Is Whoâ€ Of Countries About To Fund The IMFâ€™s Bail Out Of Europe
Courtesy of Tyler Durden
When back in April we wrote about the huge expansion in the [...]
Soros is just telling us what we all know, but some people donÃ¢â‚¬â„¢t want to admit. No wonder the right hates him so much.
Spending increases aggregate demand and grows the economy. When the private sector is too far in debt to narrow the output gap and reduce unemployment, the government has to pick up the slack. Fiscal stimulus cuts the deficits by generating more government revenue.
People mistakenly believe that deficits [...]
>>> from The Telegraph
By Ambrose Evans-Pritchard
June 14, 2010
AXA fears ‘fatal flaw’ will destroy eurozone…
Analysts at the French financial group AXA see a serious likelihood that the eurozone will break in half or disintegrate, dismissing Europe’s Ã¢â€šÂ¬750bn (Ã‚Â£623bn) rescue package for Club Med debtors as a stop-gap measure that misdiagnoses the problem.
The markets are very nervous because they can see that there is a fatal flaw in the system and no [...]
If the purpose of BaFin’s action was to drive wolfpack “speculators” off Greece’s back, it failed. Yields on 10-year Greek bonds rose 37 basis points to 7.918pc. What it showed is that CDS contracts barely matter. The issue is whether “real money” investors such as the Chinese central bank are willing to buy Greek and Portuguese debt.
The short ban set off instant capital flight to Switzerland. BNP Paribas said Ã¢â€šÂ¬9.5bn [...]
David Rosenberg writes in ThursdayÃ¢â‚¬â„¢s Breakfast with Dave piece:
Ban the Bailout
First we have governments bailing out banks (and auto companies and mortgage providers), homeowner debtors, and now we have governments bailing out governments. When does someone finally say Ã¢â‚¬â€ enough is enough!
Oh no Ã¢â‚¬â€ bank ABC is too big to fail. Company XYZ is too complex to fail. And now country GRK is too interconnected to fail. Give me a [...]