Europe's Looming Bust

HenryTo · Posted: Fri Nov 17, 2006 2:16 am Post subject: Europe's Looming Bust

Europe's growth down a notch but as I have mentioned before, next year should be bad - especially given that the ECB doesn't have much flexiblity in monetary policy:

http://www.economist.com/daily/news/displaystory.cfm?story_id=8164601

rffrydr · Posted: Tue Nov 29, 2011 6:52 am Post subject:

....and it looks like they're in for a soft landing:

http://www.bloomberg.com/news/2011-11-29/german-exports-breach-eu1-trillion-sales.html
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HenryTo · Posted: Sun Nov 27, 2011 10:17 pm Post subject:

Not surprisingly, Europe is starting to enter a recession:

http://blog.yardeni.com/2011/11/european-monetary-business-indicators.html

HenryTo · Posted: Fri Nov 25, 2011 12:18 pm Post subject:

Belgium--with 350 bil EUR of debt (100% of GDP), and 130 bil EUR in bank guarantees--is downgraded to AA by S&P.

http://www.businessinsider.com/why-belgium-is-a-mess-2011-11

HenryTo · Posted: Fri Nov 25, 2011 12:10 pm Post subject:

Italian and Spanish yield curves now decidedly inverted.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/11/25/bloomberg_articlesLV84IX6KLVRA.DTL

nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

Yep, lots of moving parts, including the reunification. Problem with scientific approach in these matters and in many markets is the lack of repeatable experiments and controls.

Interesting that the FM analysis linked above hits the same point I've hit, but from a different angle ... the elites in many of the "strong" EU states, such as Germany, benefit greatly from the Euro experiment and have some strong incentives to not let it end. It ain't as simple as "we don't want to pay for your profligacy" because that's not quite all they'd be paying for ...
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rffrydr · Posted: Wed Nov 23, 2011 7:28 am Post subject:

No doubt there is more to the story....but no doubt Greek trains more expensive than taxis underscore the joyride paid for on the german back. Remember those "spendthrift" germans were reunifying--and spent the early part of this decade "liberalizing" their labor profile. I have no doubt germany would have ridden the back of EEM decade, d-mark or no d-mark.

To Americans, witness this success, in even extreme labor cost situations. It's not the benefits a society bestows, it's what that society can afford.

Tonight we crossed the Rubicon: no longer a question of some piggy part of Europe, but german bond auction failure, far from signaling "risk-on," shows market giving up on "europe." Shocked

What did you say, Timmy, "spreads" are "in"?

That Bagehot, let europe burn strategy below, has now reached its limit. We'll see if Merkel's animosity towards markets extends to her own--time to "fish or cut bait."
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nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

http://fabiusmaximus.wordpress.com/2011/11/22/31200/
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

rffrydr · Posted: Tue Nov 22, 2011 7:29 pm Post subject:

I remember the day Goldman got Greece in....everybody just seemed to "let it go." Germans were as timid then as hard today.
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HenryTo · Posted: Mon Nov 21, 2011 8:59 pm Post subject:

Financial engineering at its worst:

http://blog.yardeni.com/2011/11/credit-insurance-fraud-industry.html

rffrydr · Posted: Thu Nov 10, 2011 8:50 am Post subject:

Technocrat time:

rffrydr · Posted: Wed Nov 09, 2011 1:26 pm Post subject:

rffrydr · Posted: Thu Nov 03, 2011 5:52 am Post subject:

Wine in decline sign of imminent bust? Bloomberg thinks so:

http://www.bloomberg.com/news/2011-11-02/spain-wine-drinking-plummets-as-rioja-sees-future-abroad-retail.html

Just like with butter twenty years ago, I see this as a generational thing. That restaurant purchases would be cut at that kind of markup is just basic economics. Nonetheless, when that 20e bottle gets priced under double it street's value the drinking will come back. This is where "liberalization" can still do some good.
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HenryTo · Posted: Tue Oct 18, 2011 12:00 am Post subject:

I tend to think that this is the last downward GDP revision for Portugal:

http://www.bloomberg.com/news/2011-10-17/portugal-says-gdp-to-shrink-more-than-earlier-forecast-on-cuts.html

rffrydr · Posted: Mon Oct 10, 2011 8:41 am Post subject:

The Battle Plan:

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HenryTo · Posted: Sun Oct 09, 2011 12:00 pm Post subject:

Still nothing solid, however:
-----------------------------------------------------------------------------------
Merkel, Sarkozy reach agreement on bank sector

BERLIN (AP) — The leaders of Germany and France, the eurozone's two biggest economies, say they have reached agreement on strengthening Europe's shaky banking sector.

German Chancellor Angela Merkel says she and French President Nicolas Sarkozy "are determined to do the necessary to ensure the recapitalization of Europe's banks."

Merkel spoke after talks with Sarkozy at Berlin's chancellery Sunday aimed at forging an agreement ahead of a summit of the European Union's 27 leaders later this month.

Sarkozy said it was "not the moment" to go into the agreement's details but said that the French-German accord "is total."

When asked whether all European banks would be recapitalized, Merkel did not directly answer the question, saying only that all banks across the eurozone would be measured by the same criteria that would be established in coordination with, among others, the European Banking Authority and the International Monetary Fund.

Both leaders declined to elaborate on their proposal, saying it must first be discussed with other European leaders.

Earlier this week, Merkel spoke in favor of a coordinated bank recapitalization following talks with the International Monetary Fund and other European leaders. The chancellor said that banks must first seek to raise new capital on the market before turning to their government, insisting that the eurozone's newly strengthened euro440 billion ($590 billion) bailout fund would then only serve as a backstop if a member state can't cope with shoring up its banks' capital.

France, however, has appeared to favor turning to the fund's resources right away instead of relying on a national facility to re-capitalize its banks — who are among the biggest holders of Greek bonds.

The chancellor has insisted that the Oct. 17-18 summit of European leaders in Brussels must send a clear signal on the issue in a bid to restore market confidence.

Germany and France, which together represent about half of the 17-nation currency zone's economic output, regularly hold talks before EU summits to chart out joint positions.