European Economy

While we wait for tonight’s announcement from the German constitutional court, there are some interesting developments in the Troika’s latest review of Portugal: The program remains broadly on track.

I’ve mentioned France a couple of times over the last year.

It’s going to be one of those high volume news weeks for Europe.

The SMP is dead!

Composite Purchasing manager Index(PMI) data was released overnight for the Eurozone and much like the manufacturing release earlier in the week there was nothing to get excited about.

Another night of Eurozone Production Management Index (PMI) data and the downward trend in activity continues as expected.

September is going to be another one of those ‘do or die’ months for Europe and events begin this Thursday with the monthly meeting of the ECB executive council.

Overnight Spain released its GDP data and as expected the news wasn’t great.

As I wrote early last week Antonis Samaras was to spend much of the weekend in talks with Angela Merkel and Francois Hollande about the future of his nation.

It shouldn’t really be news to anyone, but the latest PMI data once again shows that Europe is heading into technical recession.

Two weeks ago I wrote a post about Mario Draghi and what appeared to be ECB’s step across the Rubicon into the arena of politics and fiscal policy in order to force Europe’s politicians to break the ‘chicken and egg’ stand-off that has plagued Europe for over a year.

It’s been 7 months and taken a private sector default but there is mounting evidence that European leaders are again reaching the limits of their own failure on Greece.

For those who have been following my European post for any length of time you may remember my basic macro theme for Europe is that the enactment of the fiscal compact across the zone will create the following dynamic: Periphery nations weakening, France in the middle, Germany outperforming, but the whole ship slowly sinking.

By Chris Becker Last night we saw the flash 2Q GDP print for the French, German and EMU economies (unchanged, up 0.3% and down 0.2% respectively) – you’ll hear more on the composition and expected flow on effects from Delusional Economics later on today.

As you may have noticed the news is a bit slow out of Europe recently.

Last week I speculated that Mario Draghi, the ECB president, was unlikely to deliver on his London promises due to a number of roadblocks.

And so the fallout from the European suicide pact continues.

Late last week the ECB president, Mario Draghi jawboned the world’ markets with the statements: Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.

As I said on Friday, I’ve long held the view that contagion into Italy and/or Germany would be the key driver for more definitive action from Europe. Although we’ll have to wait until Thursday (Frankfurt time) for the ECB’s executive council meeting to find out the details the rumours are already swirling.

I’ve long thought that it was going to take the the European crisis to begin to genuinely infect Italy or Germany before we saw any real action from the Europeans.

Here is the video of Mario Draghi that got markets excited over night.