… an incredulous 57.2% of under-25s out of work, Spain is closing in on Greece, according to official data, for the worst youth unemployment situation in Europe.
- Spain Is Beyond Doomed: The 2 Scariest Unemployment Charts Ever (The Atlantic, April 26, 2013):
Spain is in a great depression, and it is one of the most terrifying things I have ever seen.
Five years after its housing boom turned to bust, Spanish unemployment hit a record high of 27.2 percent in the first quarter of 2013. It’s almost too horrible to comprehend, but 19.5 percent of the total workforce has not had a job in the past six months; 15.3 percent have not in the past year; and 9.2 percent have not in the past two years. You can see this 1930s-style catastrophe in the chart below from the National Statistics Institute. Continue reading »
- Spanish Unemployment Tops Record, Rising At Fastest Rate In A Year (ZeroHedge, April 25, 2013):
In yet another worse-than-expected macro data point, Spain has just breached the 27% unemployment level – the highest since at least 1976, when data began following dictator Francisco Franco’s death. At 27.2% this is already higher than the IMF’s year-end estimate of 27% suggesting growth estimates are already overly optimistic. What is more concerning is the rate of increase in the joblessness is rising once again. The 1.1 percentage point rise is the largest in a year and 177,700 more households now have no actively employed members than a year ago. The greatest fear though, for European leaders and the Spanish people themselves, is the surge in youth unemployment. As we have noted a number of times in the past, the possibility of social unrest is exaggerated significantly by this number and at an incredulous 57.2% of under-25s out of work, Spain is closing in on Greece, according to official data, for the worst youth unemployment situation in Europe.
- The New “Nazis” of Spain (Testosterone Pit, April 16, 2013):
On Saturday, Popular Party Secretary-General María Dolores de Cospedal, number two of the governing party in Spain, said that she knew she was going to get criticized, “but this is pure Nazism.” On Sunday, rather than resigning, she repeated it. For more precision, she added that going to someone’s house to “harass” him “is a totalitarian attitude comparable to what occurred in the thirties in a European country.” A reference to Nazis marking the homes of Jews.
But these “Nazis” are folks who are standing up to the banks and draconian mortgage laws that the government is hell-bent on protecting. And they have a special word for their action: escrache. It had become popular in Argentina in 1995 after President Carlos Menem pardoned collaborators of the Junta. Activists with banners would gather in front of the home or office of a pardoned perpetrator. They’d chant and play music to let neighbors know. While Junta members were beyond the law, they could still be publicly humiliated.
-The Entire Economy Is a Ponzi Scheme (ZeroHedge, April 13, 2013):
Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky, the Wall Street Journal and many others say that our entire economy is a Ponzi scheme.
Former Reagan budget director David Stockman just agreed:
YouTube Added: 10.04.2013
So did a top Russian con artist and mathematician.
Even the New York Times’ business page asked, “Was [the] whole economy a Ponzi scheme?”
In fact – as we’ve noted for 4 years (and here and here) – the banking system is entirely insolvent. And so are most countries. The whole notion of one country bailing out another country is a farce at this point. The whole system is insolvent.
Tags: Barack Obama, Bill Gross, Bonds, Debt, EFSF, ESM, EU, Europe, France, Germany, Global News, Government, Greece, Italy, Joseph Stiglitz, Laurence Kotlikoff, Michel Chossudovsky, Nouriel Roubini, Obama administration, Politics, Portugal, Spain, U.S.
- Carmen Reinhart: “No Doubt. Our Pensions Are Screwed.” (ZeroHedge, April 11, 2013):
“The crisis isn’t over yet,” warns Carmen Reinhart, “not in the US and not in Europe.” Known for her deep understanding that ‘it’s never different this time’, the Harvard economist drops the truth grenade a number of times in this excellent Der Spiegel interview. Sweeping away the sound and fury of a self-serving Federal Reserve or BoJ, she chides, “no central bank will admit it is keeping rates low to help governments out of their debt crises. But in fact they are bending over backwards to help governments to finance their deficits,” and guess what, “this is nothing new in history.”
After World War II, all countries that had a big debt overhang relied on financial repression to avoid an explicit default. After the war, governments imposed interest rate ceilings for government bonds; but, nowadays, she explains, “monetary policy is doing the job. And with high unemployment and low inflation that doesn’t even look suspicious. Only when inflation picks up, which is ultimately going to happen, will it become obvious that central banks have become subservient to governments.”
Nations “seldom just grow themselves out of debt,” as so many believe is possible, “you need a combination of austerity, so that you don’t add further to the pile of debt, and higher inflation, which is effectively a subtle form of taxation,” with the consequence that people are going to lose their savings. Reinhart succinctly summarizes, “no doubt, our pensions are screwed.”
This will take 3 minutes to read – read it. Understand what she is saying. Continue reading »
- Record 2,564 Spanish Firms File For Bankruptcy In Q1, 45% Higher Than Year Ago (ZeroHedge, April 8, 2013):
Perhaps the best measure to gauge the European recovery is by the soaring number of companies going bust, because only from this perspective is Europe finally “fixed.” As Reuters reports citing a report by Axesor, a record 2,564 companies filed for “insolvency proceedings”, a more palatable version of the word bankruptcy, in the first quarter – an increase of 10% from Q4 and up a whopping 45% from Q1 2012. The reasons given: “tight credit conditions and meager demand.” Or in other words: no actual cash flow to fund demand for products and services. Obviously it will take some truly phenomenal massaging and manipulation to represent GDP as rising in this environment, but we are confident the Spanish authorities are already on it, and somehow the Spanish pension fund, already 97% filled with Spanish government bonds, will somehow have a finger in yet another completely unbelievable economic print which will fool most of the algos most of the time on flashing red Bloomberg headlines.
“Most Spanish businesses did not prepare for a crisis this big or this long, which could be a determining factor,” said Javier Ramos-Juste, head of economic studies at Axesor.
Spain has been in its second recession in five years for the past 18 months and unemployment is more than 25 percent.
- Mario Draghi Responds To Zero Hedge: “There Is No Plan B” (ZeroHedge, April 4, 2013):
This happened earlier today, at the ECB press conference:Scott Solano, DPA: Mr Draghi, I’ve got a couple of question from the viewers at Zero Hedge, and one of them goes like this: say the situation in Greece or Spain deteriorates even further, and they want to or are forced to step out of the Eurozone, is there a plan in place so that the markets don’t basically collapse? Is there some kind of structural system, structural safety net, especially in the area of derivatives? And the second questions is: you spoke earlier about the Emergency Liquidity Assistance, and what would have happened to the ELA in Cyprus, the approximately €10 billion, if the country had decided to leave the Eurozone?
Mario Draghi, ECB: Well you really are asking questions that are so hypothetical that I don’t have an answer to them. Well, I may have a partial answer. These questions are formulated by people who vastly underestimate what the Euro means for the Europeans, for the Euro area. They vastly underestimate the amount of political capital that has been invested in the Euro. And so they keep on asking questions like: “If the Euro breaks down, and if a country leaves the Euro, it’s not like a sliding door. It’s a very important thing. It’s a project in the European Union. That’s why you have a very hard time asking people like me “what would happened if.” No Plan B.
Secondly, I think the ECB has shown its determination to fight any redenomination risk. And OMT with its precise rules and acting within its mandate, is there to this purpose. So that’s the answer to the first question.
The second question was about the ELA, but again it’s related to “if Cyprus leaves” and again we don’t have that in mind, so…. No Plan B.
Informative. We do have three follow up questions: Continue reading »
- Betray Your Bank Before Your Bank Betrays You (Bloomberg, March 28, 2013):
What’s a Slovenian with several hundred thousand euros in the bank supposed to do? Spread it out among at least a few different banks, that’s what. Or move the money out of the country, while it’s still possible.
Imagine what must be on the minds of any savvy depositors still left at Nova Kreditna Banka Maribor d.d., now 79 percent- owned by Slovenia’s government. It was one of only four lenders in October that failed the European Banking Authority’s latest capital-adequacy test, a ritual best known for how lax its standards are. One that flunked was Bank of Cyprus Pcl, where uninsured depositors face 40 percent losses as part of the country’s bailout terms. Another was Cyprus Popular Bank Pcl, also known as Laiki Bank, where uninsured deposits will fare far worse and the bank is being shut.
Cypriot banks’ customers were complacent after uninsured deposits went unscathed in Ireland, Greece, Spain and Portugal, the first euro-area countries to seek international rescues. Slovenians won’t have that excuse should their country be next.
- This Is How A Country Ends: Not With A Bang, But A Bailout (ZeroHedge, March 26, 2013):
Curious how in the New Normal a nation is brought to its untimely end without a single shot being fired? Dimos Dimosthenous, who has worked at the Bank of Cyprus for over 30 years, explains:
“That will be the end. Our jobs, our rights, our welfare funds will be lost and Cyprus will be destroyed.”
In short: not with a bang, but a bailout.
… But at least it still has the symbol for all that is wrong with the broke(n) status quo: the €
First, however, much more pain, because as Cyprus’ FinMin Sarris said a short while ago, uninsured depositors in the second largest bank Laiki which is now pending lqiuidation, may lose 80% (read 100%… or more), and wait up to seven years for a payout. Of course, with the majority of the “evil, tax-evading Russians” long gone having used the chaos and assorted loopholes in the past week to get out of Dodge, the only people punished are assorted local hard workers, and domestic businesses, now set to liquidate as soon as they can afford the bankruptcy filing fee.
Finally, speaking of getting out of Dodge, it is surprising that while professing its love for all man-made bubbles and going all in stocks no matter the fundemantls, the firm that is the shadow overlord of Wall Street, BlackRock, is doing just that.
BlackRock Inc. the world’s largest money manager, has cut holdings of Italy and Spain government bonds over the past three months. The firm may shed more if the euro-zone’s growth outlook deteriorates.
“We have been less enthusiastic about euro-zone sovereign debt compared to three to six months ago,” said Rick Rieder, chief investment officer of fundamental fixed income and co-head of Americas fixed income at BlackRock. “If growth continues to deteriorate in the euro zone, due in large measure to weak private-sector lending from a deleveraging banking sector, we would further reduce our positions in the euro zone, such as in Italy and Spain.”
- El Pais Retracts Article Alleging “Merkel, Like Hitler, Has Declared War On Europe” (ZeroHedge, March 24, 2013):
What does it take for the Spanish “first amendment” journalistic override to kick in? Apparently, in the case of local media leader El Pais, putting up the following in print: “Merkel, como Hitler, ha declarado la guerra al resto del continente, ahora para garantizarse su espacio vital económico.” For the Spanish-challeneged this translates as follows: “Merkel, like Hitler, has declared war on the rest of the continent now to secure their economic living space.” Ah yes, the touchy verboten topic of German “Lebensraum” – its invocation, and ostensibly the unflattering Merkel comparison (seen so often in Greece) were enough to get the article by Juan Torres López in the Andalusia version of El Pais titled simply enough “Alemania contra Europa” taken down.Is it perhaps because unlike in Greece, where articles like that are a daily occurrence, Spaniards still have something to lose should they also lose the good graces of the German chancellor? Something that is more than one Spiderman towel per depositor in the nation’s just as insolvent banking system, where apparently unlike in Cyprus, the ESM actually does work to preserve liquidity and stability?…
A cached version of the article:
- 17 Signs That A Full-Blown Economic Depression Is Raging In Southern Europe – Is The U.S. Next? (Economic Collapse, March 14, 2013):
When you get into too much debt, eventually really bad things start to happen. This is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well. It simply is not possible to live way beyond your means forever. You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you. And when it catches up with you, the results can be absolutely devastating. Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies. In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining. And you know what? None of those countries has even gotten close to a balanced budget yet. They are all still going into even more debt. Just imagine what would happen if they actually tried to only spend the money that they brought in?
I have always said that the next wave of the economic collapse would start in Europe and that is exactly what is happening. So keep watching Europe. What is happening to them will eventually happen to us.
The following are 17 signs that a full-blown economic depression is raging in southern Europe…
Continue reading »
- Fed Injects Record $100 Billion Cash Into Foreign Banks Operating In The US In Past Week (ZeroHedge, March 9, 2013):
Those who have been following our exclusive series of the Fed’s direct bailout of European banks (here, here, here and here), and, indirectly of Europe, will not be surprised at all to learn that in the week ended February 27, or the week in which Europe went into a however brief tailspin following the shocking defeat of Bersani in the Italian elections, and an even more shocking victory by Berlusconi and Grillo, leading to a political vacuum and a hung parliament, the Fed injected a record $99 billion of excess reserves into foreign banks. As the most recent H.8 statement makes very clear, soared from $836 billion to a near-record $936 billion, or a $99.3 billion reserve “reallocation” in the form of cash – very, very fungible cash – into foreign (read European) banks in one week.
- Italy Is Not Spain – It’s Worse (ZeroHedge, Feb 28, 2013):
With Rajoy quietly gloating at his political fraud being off the front-pages thanks to Italian elections, it seems the more we dig into Italian reality, the weaker the story becomes. The meme of the last few years has been that “at least we’re not as bad as Greece” and rightly so, for as Bloomberg’s Niraj Shah notes today, Greece’s poverty rate is a stunning 31% (against Holland’s 15.7%). However, while all eyes have been focused on Spain’s dismal economy, the sad reality is that Italy is worse than Spain in that its poverty rate is a breath-taking 28.2% (relative to Spain’s 27%) – even though the unemployment rates in the two nations are vastly different (Spain 26% and Italy 11.2%). Given this fact it is perhaps not surprising that the ‘people’ voted against austerity and furthermore, that Italy’s CDS has pushed above Spain’s for the first time in over a year.
Chart: Bloomberg Briefs
- Nationalized Bankia To Post Largest Corporate Loss In Spanish History (ZeroHedge, Feb 21, 2013):
Just in case anyone is confused about how fixed Europe is, insolvent Spanish TBTF megabank, which F’ed last year and had to be bailed out by the government, will post earnings (and in this case we use the term very loosely) next week at which time it will report the biggest corporate loss in Spanish history. From Telegraph: “On Thursday Bankia will report full-year earnings, including a €12.6bn provision taken at the end of last year. The writedown is a result of the lender moving assets into Spain’s “bad bank” at heavy discounts. Bankia, which is seen as a symbol of Spain’s financial woes, was created through the merger of seven smaller savings banks before being listed on Madrid’s stock exchange. When the company failed, hundreds of thousands of people who had been sold shares saw their savings wiped out. The collapse forced Spain to ask Europe for a bailout for its banking sector, which has meant the lender is subject to tight controls. Bankia is trying to sell its 12pc stake in International Consolidated Airlines Group, the parent company of British Airways, which is valued at about £510m, and 5.3pc of the power company Iberdrola, which is worth about €1.24bn.”
- Germany, Spain Set To Pull The Plug On Green Energy (ZeroHedge, Feb 14, 2013):
Over ten years ago, when Europe was a bright and shining example of experimental monetarist “brilliance”, and when the money was flowing, the continent decided to do the ethical thing and actively promote the pursuit and development of renewable energy through countless government subsidies. As a result, Germany and Spain became the undisputed leaders in the race for a green future, and both created similar laws to encourage the development of renewable energy. There were two problems: i) green energy, while noble in theory, is about the worst idea possible when it comes to profitability and capital self-sustainability and constantly needs governmental subsidies, and ii) it was the end consumers who would pay for the government’s generosity, in the form of a surcharge on electric bills. In Germany, for example, as the industry grew (in size, and thus in losses) demand for the subsidy increased, driving the surcharge higher. In January, the surcharge, which amounts to about 14% of electricity prices, nearly doubled to 5.28 euro cents per kilowatt hour.
And, as the WSJ so deftly explains, “that means ordinary consumers shoulder the lion’s share of the costs for what the German government calls its “energy revolution.” And here is where a third problem comes into play, because while German and Spanish consumers were happy to pay a surcharge in the golden days of a Dr. Jekyll Europe when everything was great, soon Europe become a doomed Mr. Hyde-ian Frankenstein monster, with imploding economies, 60%+ youth unemployment and resurgent neo-nazi powers. In short: the German and Spanish consumers have had it with funding an infinite money drain (even bigger than Greece), when cash flow is scarce and getting worse, and have just said “Basta” and “Nein“, respectively. Continue reading »
- Greek Youth Unemployment Tops 60% (ZeroHedge, Feb 14, 2013):
Optimism it seems is all that matters (or is all that is allowed) as we are battered by dismal data left, right, and center. Of course, a reflection on the markets tells any ‘smart’ person that it all must get better – or why would stocks or sovereigns, or EURUSD be where it is? However, the 6 out of 10 15-24 year olds in Greece (61.7% to be exact) would beg to differ with that view of the world (as their economy grinds to a halt) – and with Spain reaching new highs at 55.6% (as well as the Euro-zone over 24%), all the bureaucratic lip-service in the world won’t stop the revolt that is coming we fear.
- The Pain In Spain Falls Mainly… Everywhere (ZeroHedge, Feb 14, 2013):
European GDP and Spain – where it’s going?
Europe Q4 GDP declines 0.6%, and economy contracts 0.9%. No one should be surprised at the latest disappointing European GDP numbers, but they hide important trends – Germany’s Q4 0.6% GDP drop was worse than expected, although the expectations remain for growth later this year. France is going to miss the 3% GDP deficit target because of low growth. For the rest of Europe the numbers were generally worse than expected – and no one credible is talking about significant growth prospects. (Sure, the Euro Elites are telling us they see growth tomorrow.. but tomorrow is always tomorrow..) Continue reading »
From the article:
“So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding, potentially taking down the financial system with them. Think I’m joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.”
- WARNING: the EU Crisis is BACK and Will Be Worsening in the Coming Weeks (ZeroHedge, Feb 12, 2013):
I want to issue a major warning to investors: the EU Crisis is going to get worse in the coming months.
I realize that most investors and analysts believe that the EU Crisis is over. Then think that because the S&P 500 is closing in on its all-time highs that things are fine in the system.
They are wrong.
The only item that held Europe together in 2012 was the credibility of EU politicians and ECB President Mario Draghi. Please note that nothing fundamental improved for the EU’s financial system: EU GDP has since re-entered a recession and EU unemployment has a hit a new record.
Indeed, the only reason things even looked better was because various Government engaged in massive interventions. In the case of Spain, this included raiding 90% of their social security fund to buy Spanish bonds so that yields would fall.
- “China Accounts For Nearly Half Of World’s New Money Supply” (ZeroHedge, Feb 8, 2013):
When it comes to the creation of money in China, and specifically the asset side of the ledger, or loans, there is much more confusion than consensus, primarily because nobody knows who it is that is creating the money: private or public entities, SOEs, the PBOC, regional banks, shadow banks, or your next door neighbor.Another thing that is largely misreported: what the actual assets pledged as collateral to new loans are. Because while it is well-known that corporate debt in China is now greater as a percentage of GDP than in any other country, the comprehensive picture is still confusing (albeit GMO did a fantastic summary recently of what is known) as reporting standards are still non-existent, and the government flat out lies about its balance sheet.
Yet one very simple shortcut to get a sense of what is truly happening in monetary China is to peek at the liability side of the consolidated balance sheet, and one line in particular, namely deposits. Because unlike in the US, where the vibrant equity Ponzi scheme has rarely been stronger, in China it is still all about the cash and as a result the bulk of the newly created money once again return back to the banking sector in the form of a deposit. Ironically, that is what banking should be about (instead of the entire industry being a glorified hedge fund) although in China even this practice has gone on way too far, and like in Europe, has long passed the point where there is real collateral value backing up the new money created (which explains the emergence of various letters of credit collateralized by copper still not dug out of the ground which reappear every time Chinese inflation spikes above 5%).
So how do deposits look when comparing the US and China? Well, after having less than half the total US deposits back in 2005, China has pumped enough cash into the economy using various public and private conduits to make even Ben Bernanke blush: between January 2005 and January 2013, Chinese bank deposits have soared by a whopping $11 trillion, rising from $4 trillion to $15 trillion! We have no idea what the real Chinese GDP number is but this expansion alone is anywhere between 200 and 300% of the real GDP as it stands now. Continue reading »
Tags: Austria, Banking, Ben Bernanke, Central Bank, China, ECB, Economy, EU, Europe, Fed, Federal Reserve, France, GDP, Germany, Global News, Greece, Ireland, money supply, Politics, Portugal, Spain, World Bank, Yuan
- Watch The Financial Markets In Europe (Economic Collapse, Feb 7, 2013):
Is the financial system of Europe on the verge of a meltdown? I have always maintained that the next wave of the economic crisis would begin in Europe, and right now the situation in Europe is unraveling at a frightening pace. On Monday, European stocks had their worst day in over six months, and over the past four days we have seen the EUR/USD decline by the most that it has in nearly seven months. Meanwhile, scandals are erupting all over the continent. A political scandal in Spain, a derivatives scandal in Italy and banking scandals all over the eurozone are seriously shaking confidence in the system. If things move much farther in a negative direction, we could be facing a full-blown financial crisis in Europe very rapidly. So watch the financial markets in Europe very carefully. Yes, most Americans tend to ignore Europe because they are convinced that the U.S. is “the center of the universe”, but the truth is that Europe actually has a bigger population than we do, they have a bigger economy then we do, and they have a much larger banking system than we do. The global financial system is more integrated today than it ever has been before, and if there is a major stock market crash in Europe it is going to deeply affect the United States and the rest of the globe as well. So pay close attention to what is going on in Europe, because events over there could spark a chain reaction that would have very serious implications for every man, woman and child on the planet. Continue reading »
- Spain Is World’s Most “Miserable” Nation, Worse Than Greece, Venezuela And South Africa (ZeroHedge, Jan 29, 2013):
A quick ranking of the world’s most “miserable” countries, based on the conventional measure of the Misery Index which is simply the Unemployment Rate plus Inflation, shows just why most people in Spain are, well, less than happy (and Spain is damn lucky there is no subset of the Misery index for just those aged 25 and under as we would certainly need a bigger chart). As the chart below shows, the Spanish “misery” is now the greatest in the world, at some 30%, and is worse than South Africa, Greece, Venezuela, Argentina and Egypt.
But fear not Spain: Croatia which is set to join the EU in July is forecast to have a debt/GDP ratio of 63.6% by 2017 from 29.3% in 2008 as growth stagnates. The country has one of the lowest labor participation rates in Europe at about 50 percent, the ILO says. In other words, at just 26%, it a virtual guarantee that Spain pole position is about to be eclipsed as Europe does the one thing it is truly good at: spread misery for the “common good.”
- Labor Minister Says France Is “Totally Bankrupt” (ZeroHedge, Jan 28, 2013):
Things in France must not be very serious, because the French labor minister accidentally let the truth come out a little earlier today. As the Telegraph reports, France’s labour minister sent the country into a state of shock on Monday after he described the nation as “totally bankrupt.”
Remember: France is one of the supposedly stable countries in Europe.
“Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage. “There is a state but it is a totally bankrupt state,” Mr Sapin said. “That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.” It appears that once one wipes out the propaganda and the smooth politico talk, things are bad and getting worse at Europe’s core. “Data from Banque de France showed earlier this month that a flight of capital has already left the country amid concerns that France’s Socialist leader intends to soak the rich and businesses. The actor Gérard Depardieu has renounced his French citizenship and decamped to Russia in protest, while David Cameron said Britain will “roll out the red carpet” to attract wealthy individuals. Pierre Moscovici, the finance minister, said the comments by Mr Sapin were “inappropriate”.”
At least France can hike the tax on the millionaires to 75% to generate more money. Oh wait, no it can’t.
- As Euro Banks Return €137 Billion In Cash, Moody’s Warns “European Banks Need More Cash” (ZeroHedge, Jan 25, 2013):
Europe has now officially become the Schrodinger continent, demanding both sides of the economic coin so to speak, and is stuck between the proverbial rock and hard place (or “a cake and eating it”). On one hand it wants to telegraph its financial system is getting stronger, and doesn’t need trillions in implicit and explicit ECB backstops, on the other it needs a liquidity buffer against an economy that, especially in the periphary, is rapidly deteriorating (Spanish bad debt just hit a new all time high while Italian bad loans rose by 16.7% in one year as more and more assets become impaired). On one hand it wants a strong currency to avoid any doubt that there is redenomination risk, on the other it desperately needs a weak currency to spur exports out of the Eurozone (as Spain showed when the EUR plunged in 2012, however that weak currency is now a distant memory and it is now seriously weighing on exports). On the one hand Europe wants to show its banks have solidarity with one another and will support each other, on the other those banks that are in a stronger position can’t wait to shed the stigma of being associated with the weak banks (in this case by accepting LTRO bailouts).
It is the latest that is the most glaring dichotomy because as reported earlier, while some 278 banks, or about half of the original LTRO participants, voluntarily paid back some €137 billion to the ECB, it is none other than Moody’s warning that European banks, especially those in the periphery, will need much more cash. Continue reading »
- The Sovereign Debt Bubble Will Continue To Expand Until – BANG – The System Implodes (Economic Collapse, Jan 20, 2013):
Why are so many politicians around the world declaring that the debt crisis is “over” when debt to GDP ratios all over the planet continue to skyrocket? The global economy has never seen anything like the sovereign debt bubble that we are experiencing today. The United States, Japan, and nearly every major nation in Europe are absolutely drowning in debt. We have heard a lot about “austerity” over in Europe in recent years, but debt to GDP ratios continue to rise in Greece, Spain, Italy, Ireland and Portugal. In general, most economists consider a debt to GDP ratio of 100% to be a “danger level”, and most of the economies of the western world have either already surpassed that level or are rapidly approaching it. Of course the biggest debt offender of all in many ways is the United States. The U.S. debt to GDP ratio has risen from 66.6 percent to 103 percent since 2007, and the U.S. government accumulated more new debt during Barack Obama’s first term than it did under the first 42 U.S. presidents combined. This insane sovereign debt bubble will continue to expand until a day of reckoning arrives and the system implodes. Nobody knows exactly when that moment will be reached, but without a doubt it is coming. Continue reading »
- Spain jobless rate hits new record high of 26.6% (PressTV, Jan 9, 2013):
New data shows Spain’s jobless rate hit a new record high of 26.6 percent for the month of November 2012, amounting to 6.157 million Spaniards.
The European Union’s statistics office, Eurostat, released the new data on Tuesday, which showed an increase of 0.4 percent from October’s reading of 26.2 percent.
The EU’s Employment Commissioner Laszlo Andor urged Spain’s government to find a political strategy to decrease the number of people without work
- By The Numbers: 20 Facts About The Collapse Of Europe That Everyone Should Know (Economic Collapse, Jan 8, 2013):
The economic implosion of Europe is accelerating. Even while the mainstream media continues to proclaim that the financial crisis in Europe has been “averted”, the economic statistics that are coming out of Europe just continue to get worse. Manufacturing activity in Europe has been contracting month after month, the unemployment rate in the eurozone has hit yet another brand new record high, and the official unemployment rates in both Greece and Spain are now much higher than the peak unemployment rate in the United States during the Great Depression of the 1930s. The economic situation in Europe is far worse than it was a year ago, and it is going to continue to get worse as austerity continues to take a huge toll on the economies of the eurozone. It would be hard to understate how bad things have gotten – particularly in southern Europe. The truth is that most of southern Europe is experiencing a full-blown economic depression right now. Sadly, most Americans are paying very little attention to what is going on across the Atlantic. But they should be watching, because this is what happens when nations accumulate too much debt. The United States has the biggest debt burden of all, and eventually what is happening over in Spain, France, Italy, Portugal and Greece is going to happen over here as well.
The following are 20 facts about the collapse of Europe that everyone should know… Continue reading »
- Two Spaniards Self-Immolate Due To Financial Problems (ZeroHedge, Jan 5, 2013):
First it was a German, then an Italian, and now, two months, later, the European self-immolation wave has spread to the country that many expect will be the next one to follow Greece into effective debt default. El Pais reports that an impoverished 57-year-old man who set himself on fire in Málaga Thursday, and subsequently died of his injuries at Carlos Haya hospital. He had third-degree burns on 80 percent of his body and suffered a multi-organ failure. The victim, thought to be of Moroccan origin, had worked in construction for years but was out of a job now, said people who knew him. In the last few months he had been scraping a living with the small change he made guiding cars into parking spaces near the hospital, an illegal practice that is usually overlooked by authorities. The police, who have not yet located his relatives, are not ruling out the possibility of an accident just as the man was lighting up a cigarette. Just two minutes before the event, he bought a pack of cigarettes from a local newsstand whose owner asked him how he was doing. Continue reading »
- Spain Plunders 90% Of Social Security Fund To Buy Its Own Debt (ZeroHedge, Jan 3, 2013):
With Spanish 10Y yields hovering at a ‘relatively’ healthy 5%, having been driven inexorably lower on the promise of ECB assistance at some time in the future, the market has become increasingly unsure of just who it is that keeps bidding for this stuff. Well, wonder no longer. As the WSJ notes, Spain has been quietly tapping the country’s richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds – with at least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt. Of course, this is nothing new, the US (and the Irish) have been using quasi-government entities to fund themselves in a mutually-destructive circle-jerk for years – the only difference being there are other buyers in the Treasury market, whereas in Spain the marginal buyer is critical to support the sinking ship. The Spanish defend the use of pension funds to buy bonds as sustainable as long as it can issue bonds – and yet the only way it can actually get the bonds off in the public markets is through using the pension fund assets. The pensioners sum it up perfectly “We are very worried about this, we just don’t know who’s going to pay for the pensions of those who are younger now,” or those who are older we would add.Via Wall Street Journal: Spain Drains Pension Fund In Borrowing Spree
Spain has been quietly tapping the country’s richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds, raising questions about the fund’s role as guarantor of future pension payouts.
- Eurozone crisis has pushed millions into poverty (France 24/AFP, Dec 10, 2012):
Crushed by an austerity squeeze and towering unemployment, millions of Europeans joined the ranks of the newly poor in 2012 in a crisis that showed no mercy for the old, women or children.An arc of misery spread pitilessly across southern Europe’s middle classes, engulfing bailed-out nations Greece and Portugal and tottering heavyweights such as the eurozone’s number four economy, Spain, and number three, Italy.