European Economy


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


Weekend Links May 23-24, 2015

China A cautionary tale from the muddy waters of Chinese business – 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


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


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


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


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


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


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


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


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


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


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


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


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


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?)


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


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


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,


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


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


Euro unemployment remains high

by Chris Becker Last night saw the release of monthly unemployment statistics for the EU, and specifically Germany and Italy alongside the monthly CPI print. Although there has been almost no monthly change the readings are still way too high (even for the Germans): German unemployment (September) at 6.7% (no change on last month) Italian unemployment


US inflation moderates as Europe deflates

by Chris Becker Last night saw the release of two key important metrics in the ongoing fight against deflation in the Northern Hemisphere by the ECB and the Fed. First, following some very lacklustre Euro-wide consumer confidence figures (something that’s been repeated worldwide), the very closely watched German CPI print for September came in as dead


A tale of two continents

by Chris Becker The divergence between the US and European economies, including that of the real central power in Germany, continues with the recent economic data reinforcing this belief. Earlier in the week the monthly manufacturing and services PMIs were released and Germany surprised on the all important former with a result barely scraping above