European Economy

17

Greece blinks

I’ve been waiting for some clarity after the winding up of the Greek Eurogroup emergency meeting before posting and it appears we the following from AP: Greece has accepted the principle of extending its current bailout programmewhich expires at the end of the month so as to keep it afloat while a long-term debt solution

5

Goldman on Greek scenarios

From Goldman Sachs: Our central case that a deal will come only after (or thanks to) the introduction of capital controls, a technical default on the IMF and issuance of IOUs/and a further build-up of arreas. The logic is that it is only when the cash constraint is fully binding and associated economic and financial

7

Greece confronts the final deadline (again!)

So here we are again. D-day for Greece…. until the next one. Well maybe not this time. The Eurogroup has called meeting for 3pm Monday ahead of emergency EU leaders summit to be held 7pm. There is obviously further negotiating occurring in the lead up to that event in the hope of a last minute deal

69

Geopolitics will trump economics in Greece

By John Browne, cross-posted from EuroPacific Capital Inc Based on the continued failure of the negotiating parties to make any substantive progress in the talks over Greek debt payments, the financial world is tied up in knots over a possible Greek exit from the European Union. The uncertainty has manifested in both high and low

21

Greece to see return of the Colonels?

by Chris Becker Talk of Grexit seems to be turning into reality as the days and hours go on towards the June 30 deadline. One of the major reforms enacted by Athens was to turn the large deficit into a surplus (admittedly, a surplus sans interest payments), but interestingly one area not touched in the

12

Greece reaches the end game

by Chris Becker For almost five years, MB has been calling for an inevitable default in Greece, not borne out of bearishness but the realpolitik of the situation that was at hand and has now unfolded. Delusional Economics wrote this earlier in the year as the new Syriza government was installed: Nearly 4 years ago I

0

Another Greek deadline upon us

From BofAML: The European proposal is asking three times more fiscal measures than what the former Greek government was willing to accept, despite a much lower primary surplus target. The Greek proposal is not specific enough on reforms, while insists on pre-election promises that we believe are unacceptable to the other side—reversing labor market reforms

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Weekend Links May 23-24, 2015

China A cautionary tale from the muddy waters of Chinese business – FT.com Weak Chinese Demand Is Pummeling Mining Stocks Everywhere, Except in China – Bloomberg China pushing ‘build now, pay later’ model to emerging world – Bruegel Development Finance with Chinese Characteristics? – Project-Syndicate The Irresistible Rise of the Renminbi – Project-Syndicate China getting

1

The long path to Greek resolution

Courtesy of James Shugg and Sean Callow at Westpac Global Economics: The Eurogroup of finance ministers and central bankers met in Riga last Friday amidst (accurate) speculation that little progress would be made towards reaching an agreement between the Greek government and its creditors on the measures Greece must (re)commit to in order that the long-delayed

10

Greece folds

Greece blinked first then: Eurogroup statement on Greece The Eurogroup reiterates its appreciation for the remarkable adjustment efforts undertaken by Greece and the Greek people over the last years. During the last few weeks, we have, together with the institutions, engaged in an intensive and constructive dialogue with the new Greek authorities and reached common

52

Grexit talks break down

From the FT: …A high-stakes meeting of eurozone finance ministers over the future of Greece’s bailout unexpectedly broke down early in deliberations after Athens angrily objected to a proposal that it continue with the terms of its current €172bn bailout, calling it “absurd” and “unacceptable”. The draft text, obtained by the Financial Times, states that

9

Greece vs Germany death match

Cross-posted from Yves Smith at Naked Capitalism. Even though the US has waded into the Greece versus Troika impasse to press Eurozone officials to soften their position on austerity, the battle lines seem only to get harder. Today, February 11, an emergency meeting of the Eurogroup, a committee of 19 Eurozone finance ministers, officially begins

6

Why are markets ignoring the Grexit?

From Goldman Sachs: EMU Peripheral Yields Have Decoupled from Greece in Levels … Greek sovereign bond yields have been going up since last September and, since January, the term structure has become inverted. Explaining the divergence with the rest of EMU have been a number of factors including: the approaching end of the ‘troika’ funding

39

What will a Grexit do to Australia?

There’s no better illustration of the coma cast over markets by central banks right now than Grexit insouciance. Equities are blase and bonds much the same with only small moves higher in peripheral European bond yields. UBS sees breaking this spell as a key step in preventing the worst case outcome: The terms of a

2

What happens if Greece is pushed too far?

Another week in the history of the European economic mess  and, aside from the Ukraine, it’s all eyes on Greece. As I mentioned 2 weeks ago I feel this entire episode is far too politically innocent on the Greek side and the idea that the Greeks could simply front up to the Troika and say “let’s

26

Pettis: Europe is a war of bankers not nations

Cross-posted from Michael Pettis‘ blog: European nationalists have successfully convinced us, against all logic, that the European crisis is a conflict among nations, and not among economic sectors. Today’s Financial Times has an articlediscussing the travails of Greece’s new Finance Minister, Yanis Varoufakis as he takes on Germany: In a small but telling sign of the

12

Greece’s next act

Nearly 4 years ago I authored a post on MB titled “Greece’s inevitable default” in which I outlined why I suspected that Greece would continue to stumble from bailout to bailout while the economy slowly imploded. … I am simply going to explain what has happened so that I can explain why under the current

6

Greek election looms as ECB weighs QE

by Chris Becker It’s getting close to three very important dates on the economic calendar that all investors should watch and prepare their risk management accordingly. First, the German 2014 GDP print later this week will precede the first ECB meeting of 2015 on the 22nd of January where some sort of QE program is likely

20

Can Germany save the Euro?

Cross posted from The Conversation by Gregory T. Papanikos Honorary Professor, Department of Economics at University of Stirling Germany has sent the message that a Greek exit from the eurozone might be the lesser of two evils. It has been interpreted as a warning to the Greek electorate ahead of its January 25 election as

67

Eurozone slips into deflation

by Chris Becker Normally, you should cheer on lower inflation as your disposable income becomes more valuable. And with oil prices falling and mortgage rates at record lows, its doubly cheerful! But in Europe, unless you’re German, tough luck. Overnight we saw two very important prints that will shake the ECB up when it meets

37

Will the Grexit happen this time?

by Chris Becker We’re seeing two stories emerge from yet another Greek crisis over the weekend, as the people head to the polls for what is likely to be a lose-lose election outcome. First, the real occupiers of power in Greece, the Germans, publicly contend that they want the beleagured nation (or is it dominion?)

2

The ECB dilemma

From Westpac’s Elliot Clarke: At its simplest, the purpose of the ECB’s recently announced asset purchase programs and the TLTRO’s are to repair the policytransmission process through the provision of liquidity to the system and (it is hoped) confidence to market participants. The dilemma for the ECB is that there is no real guarantee that borrowers are willing

4

Goldman sees new European recession

Last night the EU cut its growth forecasts again. The European Commission said it now expects gross domestic product in the eurozone to grow 0.8% this year, down from 1.2% it forecast this spring. Goldman Sachs models are now seeing renewed contraction: RETINA retreats further into Q3 contraction Bottom line: We are less than a fortnight away from

49

Germany dug its own hole

by Chris Becker It doesn’t get any better for the EU/EZ with its powerhouse economy – and where the real power resides – Germany again showing signs of a very steep slowdown. Last night saw the release of a whopping near 6% reversal in exports for August: This release confirms the shocking factory orders print,

55

Germany shrinks

By Chris Becker Last nights monthly industrial production stats for Germany – the powerhouse of the great European experiment – were shocking, down 4% month on month and reversing to a nearly 3% retraction on an annual basis. There is now open talk of Germany possibly going into recession, joining its southern “brothers” as the

10

Draghi fumes as Naples burns

by Chris Becker ECB President Mario Draghi failed to provide two solutions last night following the ECB’s monthly rate meeting, where the refinancing rate was kept at 0.05% and deposit rates in the negative. First, no real solution to the ongoing European deflation/unemployment quagmire and secondly, no pumping of the asset markets with liquidity to