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from FT: The missing word in the election debate is competitiveness. Italy’s economy has lost competitiveness over the past decade or so. Internal labour costs have grown at a faster pace than productivity, and faster than in most of the rest of the world. Since the creation of the euro, Italy’s unit labour costs have risen by about 30 per cent more than the currency area average. Read more So, the big question is – how do you solve the Spanish crisis? In fact, how do you solve the whole euro crisis? The simple answer is, first, I don’t think there is anything much more Spain can do. Second, the solution to Spain’s dilemma is, I believe, the solution to the euro problem. Unfortunately, it still appears as though Europe’s top policymakers – that is, the Germans – are trying to “muddle [...] From FT:
Greece is stuck in a vicious cycle of insolvency, low competitiveness and ever-deepening depression. Exacerbated by a draconian fiscal austerity, its public debt is heading towards 200 per cent of gross domestic product. To escape, Greece must now begin an orderly default, voluntarily exit the eurozone and return to the drachma. The recent debt exchange deal Europe offered Greece was a rip-off, providing much less debt relief than the country needed. If you pick apart [...] Greece is stuck in a vicious cycle of insolvency, low competitiveness and ever-deepening depression. Exacerbated by a draconian fiscal austerity, its public debt is heading towards 200 per cent of gross domestic product. To escape, Greece must now begin an orderly default, voluntarily exit the eurozone and return to the drachma. The recent debt exchange deal Europe offered Greece was a rip-off, providing much less debt relief than the country needed. If [...] In a new note out, SocGen’s famous bear Albert Edwrads says it’s: “Time to stiffen the sinews, summon up the blood and gird the loins.” What’s he talking about? Basically, margins are about to come down, bringing earnings down with it, and thus brining stocks lower overall. He specifcally draws his focus to the dramatic turn in productivity that was announced earlier last month: Not many people paid attention to the US [...] |
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