Wolf Richter, Testosterone Pit
Preparing for Greece’s exit from the Eurozone has been picking up momentum and has reached critical mass—on the way to a fait accompli. Still unspeakable in public discussion last year, it has become a routine topic at all levels of government.
While everyone at the very top still hues to the line that Greece should stay in the Eurozone, out of the other side of the mouth comes but—especially since the [...]
On the radio this morning a journalist from the New York Times confidently asserted that Greece would soon leave the Euro and issue Drachma. Both the new Drachma and the resulting Euro were both likely to plunge as a result and therefore it’s a good time to book an August vacation to Greece (meanwhile German vacationers are avoiding Greece in droves, no doubt wary of an unwelcome reception).
While the journalist’s confident forecast of a Greek exit may [...]
Wolf Richter www.testosteronepit.com
Preparing for Greece’s exit from the Eurozone has been picking up momentum and has reached critical mass—on the way to a fait accompli. Still unspeakable in public discussion last year, it has become a routine topic at all levels of government. While everyone at the very top still hues to the line that Greece should stay in the Eurozone, out of the other side of the mouth comes the but—especially since [...]
On Thursday afternoon, Angela Merkel will meet with the heads of party and faction in the Bundestag parties responsible for the first time to negotiate the implementation of the Fiscal Pact (the opposition wants to take the vote on it until after the summer break in the eye - here ). Without two-thirds majority of the Covenant can not be ratified.
Without binding budgetary rules, “we will create a political union can not,” she [...]
The UK economy shrank by 0.3% in the first three months of the year, more than previously thought, revised figures have shown.
Last month’s initial estimate from the Office for National Statistics (ONS) showed a contraction of 0.2%.
The downward revision was due to a bigger contraction in construction output than previously estimated.
Over the last year and a half, the economy has fluctuated between quarters of growth and contraction.
In the [...]
April was a washout for the high street as heavy rain contributed to the biggest monthly plunge in retail sales volumes in more than two years.
In what was a black month for retailers, official figures showed that sales volumes fell by a worse than expected 2.3% in April. The grim figure was partly because of a record drop in demand for fuel after panic buying in March. This was prompted [...]
European shares are in free fall right now, with all major indices down about 2 percent or more.
A look at the carnage so far:
CAC 40: -2.1%
FTSE MIB: -3%
IBEX 35: -2.1%
Meanwhile, the euro is also getting killed, briefly dipping to $1.261 before recovering to about $1.266, its lowest value since 2010. Meanwhile, U.S. Treasuries are confirming this risk-off attitude, with yields rivaling lows seen late last year.
This comes ahead of an [...]
Austria’s Finance Minister Maria Fekter said she opposes joint euro-area bonds as they would cost the Alpine republic more interest.
“Like my colleague Schaeuble I am against euro bonds,” Fekter told reporters in Vienna today. “I’m not willing that Austria should potentially pay twice as high interest as we currently do. As long as fiscal discipline of the euro nations isn’t completely complied with, as long as stability isn’t really really [...]
France just went bonkers again with their commie government:
PARIS (AFP)–Greece’s exit from the eurozone risks causing an “unpredictable” spread of the debt crisis, a scenario which France will work to avoid at all cost, French Finance Minister Pierre Moscovici said Tuesday.
“Everything must be done to help pro-European and pro-euro forces in Greece,” ahead of repeat elections due next month, Moscovici said, citing “measures to boost growth and give back hope [...]
by Tyler Durden
We have already provided much cold, hard, clinical facts on the hypothetical Greek EMU exit on countless occasions before. Yet Jefferies’ David Zervos has done it with such a peculiar flair which we have not encountered before, that we felt compelled to share with it readers. Zervos’ flair shines particularly when analyzing what happens at T-0, i.e., June 16, i.e., the day before Greek election day, i.e., the last [...]
From the latest letter (.pdf) from Goldman Sachs Asset Management chairman Jim O’Neill come some really nicely-put thoughts on Greece.
In a nutshell, he says that when all his clients ask him about Greece and Europe, his observations are:
1) Greece is facing an ultimatum in the next election.
2) The ECB will do everything to avoid contagion (think: massive liquidity injections).
3) The mood in Germany is changing towards tolerance of inflation and Eurobonds.
Here’s his full, written-out [...]
It’s clear from reading various analyst/strategist notes, and listening to investors that a new conventional wisdom is starting to harden on Greece.
Conventional wisdom is often wrong and it frequently changes, but it’s useful to know what it is at any given time if for another reason than that you know what is a surprise and what isn’t.
Here’s a few quick bullet points on how minds are melding these days.
The next [...]
Angela Merkel Stands Firm On Greece At G8 Talks After inconclusive discussions, leaders issue communique saying ‘the right measures are not the same for each of us’
Patrick Wintour 20 May 2012
Angela Merkel has declined to shift position on fresh measures to stimulate demand in the euro area, including the idea of eurobonds, leaving other EU countries hoping she will adopt a more conciliatory mood when the EU heads of government [...]
Greece’s structural problems may take up to 10 years to fix and the country may need assistance from the World Bank to make needed adjustments, former European Central Bank Executive Board Member Lorenzo Bini Smaghi said.
“I think what needs to be done is to have a longer term perspective,” Bini Smaghi said in an interview with Dublin- based RTE. “Greece will not be solved in one or two years, it will take [...]
The Bank of England has cut its growth forecast for this year to 0.8% from 1.2%, saying the eurozone “storm” is still the main threat to UK recovery.
The eurozone was “tearing itself apart” and the UK would not be “unscathed”, said its governor Sir Mervyn King.
He also confirmed that the Bank has been making contingency plans for the break-up of the euro.
The rate of inflation will remain above the [...]
I write in the Daily Mail about Europe’s rejection of austerity. It’s not just the French and Greek election results. Within the past ten days, the Dutch and Romanian governments have also been brought down over their attempts to make savings. The same thing will keep happening across the Continent, at election after election.
Eurocrats, too, are tiptoing away from cuts, belatedly aware of how outrageous it sounded to argue for austerity in the [...]
Wolf Richter www.testosteronepit.com
The conflict within the Eurozone has been simmering for weeks. On one side: German Chancellor Angela Merkel and her efforts to protect and promote her oeuvre. On the other side: Socialist François Hollande who is running against President Nicolas Sarkozy in the French presidential elections. But now, Merkel has raised the stakes by roping in three powerful allies and lining them up against Hollande—a desperate and risky gamble to keep Sarkozy [...]
While our assessment that the latest and certainly not greatest European summit due this Friday will be yet another dud (confirmed by today’s Merkozy non-statement which took both Eurobonds and the ECB off the table), we are surprised to learn that none other than Deutsche Bank has once again joined our call that the market continues to get ahead of itself, in the process making life for the ECB [...]
German Chancellor Angela Merkel and French President Nicolas Sarkozy are speaking from the Elysee Palace in Paris right now.
We’re live blogging the whole thing right here.
Watch live at France 24.
9:30 AM | Sarkozy says he’s in complete agreement with Merkel about treaty changes and eurozone crisis fix.
9:31 AM | Eurobonds are completely out.
9:32 AM | Merkel says trust is the most important thing to fixing Europe right now.
9:33 AM | Countries will be held to budget and deficit restrictions.
9:34 AM | Merkozy have both said [...]
Jefferies strategist David Zervos is back again with new recommendations about how the U.S. could step in and save the global economy.
This week: threaten complete disaster if EU leaders don’t act right away.
Akin to what he said about the matter last week:
The game in Europe is as we have described many times before – the Germans want budgetary control throughout all of Europe and the rest of EMU wants Eurobonds. [...]
Deutsche Bank’s Jim Reid, who has taken etudes in Mutual Assured Destruction to a level not evenLeopold Godowsky would be able to execute (which is expected: DB is the one bank in Europe that has the biggest disconnect between reality and where the market trades its securities) reminds us once again that without the ECB stepping in it is all lost: “We are fast running out of options. The [...]
Uploaded by RussiaToday on Nov 24, 2011
European Commission president Jose Manuel Barroso and German Chancellor Angela Merkel look set for a bust up. The unelected Brussels bureaucrat wants to issue bonds to pull his single currency project out of the debt hole it’s in. Barroso has also warned the euro could collapse unless governments are more economically integrated. But Merkel absolutely opposes the proposal of collective borrowing – saying Eurobonds are [...]
Submitted by cpowell on Tue, 2011-11-22 13:38. Section: Daily Dispatches
By Jack Farchy
Financial Times, London
Tuesday, November 22, 2011
Ever since the eurozone bond markets first started to get the jitters, hedge fund managers have been whispering that gold could play a part in resolving the crisis.
Until recently this discussion has mainly been the preserve of gold market conspiracy theorists and backbench German politicians.
But now the use of gold to fund a eurozone bailout is [...]
BERLIN (AP) — German Chancellor Angela Merkel rejected a new push by the European Commission for bonds issued jointly by the 17 euro nations, saying Tuesday they wouldn’t resolve the debt crisis and now is the wrong time to discuss them.
She appeared to be joined in her resistance to immediate talk of so-called “eurobonds” by eurozone chief Jean-Claude Juncker and Herman Van Rompuy, president of the European Council, which is [...]
Spain sells Treasury bills, yields jump
Spain Pays More to Borrow Than Greece as Rajoy Appeals to Europe
France’s AAA Status in Tatters as Yields Surge: Euro Credit
Spain demands bond price switch
ECB Urged To Set Ceiling For Sovereign Bond Yields (George Soros)
Italy banks face funding lockout as bonds trade at junk levels
Wash. governor proposes temp sales tax increase
NFTA plans to lay off 20% of transit police force
Detroit City Council’s plan: Increase income [...]
To ensure the European sovereign debt crisis doesn’t go to waste, the markets have kept policy makers and bankers on their toes. The naysayers of a European turnaround have become so overwhelming that it is stunning Europe hasn’t submerged into the Atlantic Ocean yet. It appears that German Chancellor Angela Merkel, the cautious woman with the checkbook, is about to turn the tide.
First off, Greece [...]
While futures soar on whatever the latest rumeur de l’heure is (soon to be refuted by Germany although with month end window dressing to be done, nobody will care) the relevant facts are once again being largely ignored. In this case, Otmar Issing, former chief economist of the massively undercapitalized hedge fund known as the European Central Bank, has told Stern magazine that “Greece will [...]