Roubini : Situation in Europe A Slow Motion Train Wreck

"Nouriel Roubini called the ongoing political turmoil in Europe a “slow motion train wreck.” Speaking to CNBC in Las Vegas on Tuesday, Roubini said he expects Greece to leave the euro zone by next year..."


at http://nourielroubini.blogspot.com/2012/05/roubini-situation-in-europe-slow-motion.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

Crisis escalates as insurrection breaks German control of Europe

"The political dam has broken in Europe. German Chancellor Angela Merkel no longer has enough allies in the club of EU prime ministers to impose her hairshirt agenda. Her methodical plans are disintegrating on every front..."

at http://ausbullion.blogspot.com/2012/05/crisis-escalates-as-insurrection-breaks.html

G-10 Macro Data Plunges To Worst In Six Months, Turns Negative

"We have discussed the exuberance and dysphoria that is exhibited by economists in the context of extrapolating trends many times and nowhere is that more clearly pictured than in Citigroup's Economic Surprise Index which tracks the rise and fall of both misses and beats as well as better or worse data. For the first time in over six months, macro data for the G-10 has turned negative (with Europe having been there for a while and the US getting very close) indicating significant weakness. When this data turned from positive to negative in July 2010 it pre-empted the 'rescue' of the global economy via QE2 and each time it has dropped below its 200DMA (which it also just did) we have seen notable deterioration in equity prices soon after. What is more worrisome perhaps is the rate of deterioration over the last two months or so. Four of the last five times we dropped this rapidly we saw significant drops in stock prices soon after (Dec 2008, August 2010, and June 2011). Europe and the US are now trending lower in macro data 'surprises' as decoupling disappears but the US remains a little less bad for those looking for silver-linings - for now.

G-10 macro data has turned negative (upper pane) dropped below its 200DMA and is at its lowest in over six months. The pace of deterioration has been rapid (lower pane) and 4 of the previous 5 times this pace of drop has occurred, equity prices have dropped considerably soon after..."

at http://www.zerohedge.com/news/g-10-macro-data-plunges-worst-six-months-turns-negative

New "Temporary" Border Controls a Vote of No Confidence in Europe; In France, Old Protectionist Idea Reawakened; Disastrous Global Trade Wars Coming Up

"New border controls are another sign of increasing protectionism in European states. It was not supposed to be this way, yet these controls represent a Vote of No Confidence in Europe

Germany and France are serious this time. During next week's meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as "an ultima ratio" -- that is, measure of last resort -- "and for a limited period of time." They reportedly go on to recommend 30-days for the period.

Of course, using catchphrases like "ultima ratio" and "limited period of time" is supposed to make such policies sound reasonable and proportionate. After all, the reasoning goes, it's just a few occasional border controls for up to 30 days. What's the big deal, right?

But the proposal is far from harmless and would throw Europe back decades. Since 1995, the citizens of Schengen-zone countries have gotten used to freely traveling within Continental Europe. Next to the euro common currency, free movement is probably the strongest symbol of European unity. Indeed, for many people, it's what makes this abstract idea tangible in the first place..."

at http://globaleconomicanalysis.blogspot.com/2012/04/new-temporary-border-controls-a-vote-of.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Roubini : Darker days ahead for The Eurozone as Recession sinks in

"Nouriel Roubini : “The trouble is that the eurozone has an austerity strategy but no growth strategy. And, without that, all it has is a recession strategy that makes austerity and reform self-defeating, because, if output continues to contract, deficit and debt ratios will continue to rise to unsustainable levels. Moreover, the social and political backlash eventually will become overwhelming.
That is why interest-rate spreads in the eurozone periphery are widening again now. The peripheral countries suffer from severe stock and flow imbalances. The stock imbalances include large and rising public and private debt as a share of GDP. The flow imbalances include a deepening recession, massive loss of external competitiveness, and the large external deficits that markets are now unwilling to finance.
Without a much easier monetary policy and a less front-loaded mode of fiscal austerity, the euro will not weaken, external competitiveness will not be restored, and the recession will deepen. And, without resumption of growth – not years down the line, but in 2012 – the stock and flow imbalances will become even more unsustainable. More eurozone countries will be forced to restructure their debts, and eventually some will decide to exit the monetary union.”
Read the entire piece at Project Syndicate >>>>>>>

at http://nourielroubini.blogspot.com/2012/04/roubini-darker-days-ahead-for-eurozone.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

John Mauldin - Europe is Destroying Their Currency

"With renewed fears of Europe becoming a systemic risk to the global banking system, today King World News interviewed John Mauldin, President of Millennium Wave Securities. Mauldin spoke candidly with KWN about the crisis, how much has been printed and what to expect going forward: “$7 or $8 trillion (in printing) is probably where we are, but whatever the number is, it’s significant. Will Europe have to print a great deal more? The answer is absolutely. What’s that number? We don’t know. We don’t know for two reasons.”

John Mauldin continues:

“We don’t know how truly bad the banking system is. If they clog the banking system up, the wheels really do come off. As a culture we are in the negative, very unpleasant situation of having to bail out a bank that we really don’t like, and we really don’t want to do that. But if we don’t, the wheels come off.

European banks are at least two and a half to three and a half times worse than US banks. Think about the US, as bad as it was in 2008, Europe is still that bad and in many cases worse. When they stop printing money, when they stop doing their version of TARP’s, which are called LTRO’s, it’s a disaster. It looks like Greece..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/13_John_Mauldin_-_Europe_is_Destroying_Their_Currency.html

Soros On Europe: Iceberg Dead Ahead

"George Soros has been a busy man the last few days. Appearing at the INET Conference a number of times and penning detailed articles for the FT (and here at Project Syndicate) describing the terrible situation in which Europe finds itself - and furthermore offering a potential solution. Critically, he opines, the European crisis is complex since it is a vicious circle of competing crises: sovereign debt, balance of payments, banking, competitiveness, and structurally defective non-optimal currency union. The fact is 'we are very far from equilibrium...of the Maastricht criteria' with his very clear insight that the massive gap, or cognitive dissonance, between the 'official authorities' hope and the outside world who see how abnormal the situation is, is troublesome at best. Analogizing the periphery countries as third-world countries that are heavily indebted in a foreign currency (that they cannot print), his initial conclusion ends with the blunt statement that "the euro has really broken down" and the ensuing discussion of just what this means from both an economic and socially devastating perspective: the destruction of the common market and the European Union and how this will end in acrimonious recriminations with worse conflicts between European states than before..."

at http://www.zerohedge.com/news/soros-europe-iceberg-dead-ahead

Greyerz - Gold Bottom, $25 Trillion in Debt, ECB & Swiss Franc

"Today Egon von Greyerz told King World News that around the world, the average debt to GDP is at a staggering 350%. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Von Greyerz also stated that even if the number was cut in half, to 175% debt to GDP, it would require the elimination of $25 trillion of debt. But first, here is what Greyerz had to say about what is happening in Europe: “Yesterday the Swiss franc came very close to the 1.20 level versus the euro. This is happening because bad economic news is coming out of Europe. Industrial production is falling and Spanish rates versus German rates, there is now a 4% gap, now people are getting worried about that again. So they are buying the Swiss franc.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/6_Greyerz_-_Gold_Bottom,_$25_Trillion_in_Debt,_ECB_%26_Swiss_Franc.html

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Richard Russell - Europe Headed into Massive Collapse

"With gold holding near the $1,625 level and global stock markets attempting to stabilize, the Godfather of newsletter writers, Richard Russell, discussed Chinese gold purchases and warned about an imminent collapse and depression in Europe and urged investors to protect themselves: “Older subscribers probably remember the brilliant Richard Koo. He was the FIRST to warn of the coming balance sheet recession. In yesterday's Financial Times Koo warns that if the ECB cuts back on money creation, Europe could be in for an economic depression.”

Richard Russell continues:

“Koo finds agreement from Nouriel Roubini, the famous NYU prof. who was the first to warn of a coming housing collapse. Says Roubini, ‘Europe could get worse than Japan. Japan had a Great Recession and a Great Stagnation, but it never had a Great Depression. But a recession in some Eurozone countries could become a depression, just like the 1930s.’

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/5_Richard_Russell_-_Europe_Headed_into_Massive_Collapse.html

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Eurozone Composite PMI® Signals Recession Says Markit; France in Renewed Decline, German Growth Weakens, Italy and Spain Contract Further

"In what should have been expected, but somehow wasn't, Eurozone weakness is across the board except for Ireland bucking the trend for now.

Markit says Eurozone Composite PMI® Signals New Recession in Eurozone

Key Points for March

• Final Eurozone Composite Output Index: 49.1 (Flash 48.7, February 49.3)
• Final Eurozone Services Business Activity Index: 49.2 (Flash 48.7, February 48.8)
• France sees renewed decline, German growth..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/eurozone-composite-pmi-signals.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

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German Manufacturing PMI Back in Contraction, New Orders Plunge, Price Inflation Up

"As expected (by me anyway), the Markit/BME Germany Manufacturing PMI® shows Germany is back in contraction.

Weaker new order intakes lead to deteriorating manufacturing business conditions in March.

Key Points:

• Output growth slows to only marginal pace
• Sharpest fall in new work for three months
• Cost inflation highest since July 2011..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/german-manufacturing-pmi-back-in.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

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Ongoing European Crisis to Result in Higher Inflation and Higher Gold Prices – Here’s Why

"On the surface things may appear to be calm, but I don’t think the European crisis is anywhere near its conclusion. Losses still have to be taken from Ireland, Spain, Portugal and possibly even Italy…There are a number of ways out of Europe’s problems. One of them is higher inflation…[which] is going to be very positive for gold… because the central banks will be under pressure to print..."

at http://www.munknee.com/2012/04/ongoing-european-crisis-to-result-in-higher-inflation-and-higher-gold-prices-heres-why/

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Pento - Global Recession, Monetary Madness & Gold

"Today Michael Pento chonicles the mounting problems that Europe is facing and stated that gold is ready to explode higher if the Fed engages in more “counterfeiting.” Pento, who founded Pento Portfolio Strategies, also writes exclusively for King World News about the fact that consumer debt is rising, while savings is tumbling. Here is what Pento had to say: “The mainstream media is busy promulgating the idea that the Great Recession is a fast-fading memory and that it’s now clear sailing for the global economy. But the true numbers belie that notion. One of the supposedly good news items being celebrated in the U.S. was found in the ISM Manufacturing Survey released this week. It increased to 53.4 in March, from a level of 52.4 in the prior month.”

Michael Pento continues:

“However, the somewhat better news on manufacturing came on the back of a U.S. consumer that has fully reverted to their borrowing and consuming ways. Spending increased by 0.8% in February, the most in seven months but incomes only increased by 0.2%. More importantly, real disposable income declined by 0.1%, which was the third such decrease in the last four months. As a consequence, the savings rate fell out of bed to 3.7% from 4.3%, which was the lowest level since August 2009.

Therefore, the small rebound in manufacturing and huge increase in spending by the consumer is ersatz and unsustainable in nature. The problem is that consumer debt has now started to increase once again, at a time when it desperately needs to contract.

The Europeans have taken a small step towards addressing their problems..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/3_Pento_-_Global_Recession,_Monetary_Madness_%26_Gold.html

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Europe on brink of another financial crisis, Darling warns

"Europe is in the eye of an economic cyclone, with a fresh storm about to hit vulnerable countries, the former chancellor Alistair Darling has warned.

Mr Darling, who accurately predicted in 2008 that Britain was on the brink of the worst economic downturn for 60 years, said European Union leaders should not be lulled into thinking that the worst of the eurozone crisis is over.
In a lecture to students at Queen Mary, University of London last week, the Labour MP said the situation in Spain, where the centre-right government is imposing severe budget cuts and a general strike wreaked havoc on Thursday, should trigger alarm bells across the EU.
The French President, Nicolas Sarkozy, claimed last month that following agreement on a fresh EU bailout of Greece, the eurozone was out of the woods. And David Cameron and George Osborne have insisted that Britain's strategy to push on with austerity measures has helped stabilise European economies. By contrast, Angela Merkel, the German Chancellor, has warned that Europe remains in a "fragile situation" and that the crisis is far from over.
Mr Darling told the university's New Labour in Government class: "Part of the problem with Europe is that a lot of them took the view that that this crisis is now behind us, therefore this is a time to visit austerity, whereas the countries who are going to be most hit by austerity [like Spain] are not out of the crisis at all."

at http://www.independent.co.uk/news/uk/politics/europe-on-brink-of-another-financial-crisis-darling-warns-7606256.html

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CHART OF THE DAY: THE TRUTH ABOUT EUROPE

"The economy is getting worse.

We just got a big slew of PMI numbers, and a few things are clear in Europe.

• The periphery is hurting badly. What countries like Spain, Italy, and Greece so desperately need is growth, and they're not getting any of it. This not only is bad from a societal standpoint (as the jobs picture gets worse and worse) but it makes sovereign debt dynamics worse, as the GDP part of debt-to-GDP shrinks.
• Core is not doing so hot either. The French number showed a particularly steep drop. Germany has dropped below 50 as well.
• Surprisingly, the only real "bright spot" was Ireland, which saw a big pickup in New Orders and exports. Somehow it continues to avoid the curse of the rest of the PIIGS.

This chart from Markit summarizes the situation up nicely, as it shows the core of Europe rapidly meeting the periphery in the recession zone.


at http://www.businessinsider.com/chart-of-the-day-european-pmi-numbers-2012-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29#ixzz1qtGMOPOl

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The Flaw In Europe’s Austerity Plan: Elections

"Getting Europe’s mainstream politicians and appointed technocrats to agree to bailouts and austerity was actually the easy part. The real challenge for these guys will be holding onto their jobs — and preserving the deals they’ve cut — in upcoming elections.
Voters, it seems, aren’t convinced that that a depression is the only solution to the euro’s design flaws. Faced with the immediate reality of poverty, they’re listening to formerly fringe voices calling for a better deal, either in the form of more help from Germany (via the European Central Bank) or a quick exit from the euro zone and a return to national monetary sovereignty. Greece, of course, is first in line:

Greece’s Fringe Parties Surge Amid Bailout Ire
ATHENS—Weeks after agreeing to an agonizing bailout deal with Europe, Greece is splintering politically ahead of national elections, raising the risk that it won’t be able to make the economic sacrifices still needed to keep it in the euro.
The election, not yet scheduled but expected in April or May, is shaping up as a public revolt against Greece’s political establishment, which has backed the austerity policies that are the price of financial life support from Europe and the International Monetary Fund. Mainstream politicians are increasingly painted as leading Greece into a debt trap, then impoverishing it in trying to escape..."

at  http://dollarcollapse.com/euro-2/the-flaw-in-europes-austerity-plan-elections/

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Decline Watch: Asia now leads the world in centa-millionaires

"North America's 1 percent are not pulling their weight, according to a new study by CitiGroup. Boomberg summarizes:

The number of Asians with at least $100 million in disposable assets overtook North America’s tally for the first time as the world’s “economic center of gravity” continued moving east, Citigroup Inc.’s (C) private bank said.
There were 18,000 “centa-millionaires” in Southeast Asia, China and Japan at the end of 2011, compared with 17,000 in North America and 14,000 in Western Europe, the bank said today in The Wealth Report 2012, published in partnership with Knight Frank LLP..."

at http://blog.foreignpolicy.com/posts/2012/03/30/decline_watch_asia_now_leads_the_world_in_centa_millionaires

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Violence, Firebombings Erupt as Spain Announces €27 Billion Deficit-Cutting Plan; Spanish Economy Will Implode; Spain Headed for Bond Revolt and Bailouts

"My friend Bran who lives in Spain writes ...

Hello Mish

Here are thoughts from the last couple of days on the strikes, protests, and violence in the wake of more austerity plans by Prime Minister Mariano Rajoy.

Pro-government news played down the strike to a virtual non-event, giving much criticism of the unions methods and exaggerations. Reality however, is that there is enough support by strikers to shape future politics, especially as austerity starts to bite.

The unions have promised to step up protests. The Indignado 15 Million Movement also protested, but separately from the unions.

One comment stuck out - German Chancellor Angela Merkel said the protests did not represent Spain. Maybe she was trying to be reassuring, but she is taking sides against maybe a million or so people of a foreign population, not very wise at best and otherwise agitating..."

at  http://globaleconomicanalysis.blogspot.com/2012/03/violence-firebombings-erupt-as-spain.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

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Spiegel Says "Even a 1-Trillion Euro Firewall Wouldn't Be Enough"; Mish Says "The Bigger the Bazooka, the More Money Will be Lost"

"Eurozone bureaucrats keep upping the ante as to how big a "firewall" is needed. And at every critical juncture, German Chancellor Angela Merkel has proven she is nothing but a liar. With every demand for additional firepower, comes an inevitable cave-in from Merkel supporting the move, no matter what she says in advance.

Meanwhile, the entire idea that firewalls can accomplish anything is ludicrous, given the key point that no currency unions in the absence of fiscal unions cannot and will not work.

I suspect Merkel understands this, merely wanting to get Germany so deep into bailouts step by step, that it will be reluctant to leave the Eurozone.

It is high time the German Supreme court step in and stop this nonsense.

However, nothing can stop Greece, Portugal, and Spain from leaving, and eventually they will. In the meantime, rest assured that every increase in firepower will be additional money of German citizens' pockets. The end-game will be a currency or banking crisis at the worst possible time.

For now, please consider 'Even a 1-Trillion Euro Firewall Wouldn't Be Enough'

European finance ministers meeting in Copenhagen on Friday agreed to boost the euro-zone firewall to over 800 billion euros. The move marks another U-turn on the part of the Merkel administration, which recently dropped its opposition to increasing the fund. German commentators warn that even the new firewall may still be too small..."

at  http://globaleconomicanalysis.blogspot.com/2012/03/spiegel-says-even-1-trillion-euro.html

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MAULDIN: The Biggest Thing That Matters Right Now Is Spain

"Last Monday I was in Paris and was asked to do a spot on CNBC London. I arrived at the studios an hour early due to a misunderstanding of the time zones, so while trying to catch up on the news I listened to CNBC. I had just written about Spain in last week's letter and guessed that was what they wanted to talk to me about, but for the full hour before I got on it seemed like every guest wanted to talk about Spain. When I had my turn and indeed got the Spain question, I smiled and noted that we were now in a period when it would be "All Spain All the Time," for at least the next year. I should have noted that there would be brief interruptions where we glanced at Portugal and perhaps Ireland, but the real focus would be on Spain.
I fully intended to write about something other than Europe this week, but the events of the last 24 hours compel me to once again look "across the pond" at the problems that not only plague Europe but will be a drag on world growth as well, as Europe goes through its continued painful adjustment as a consequence of trying to adopt a single currency. Since Spain is going to be on the front page for some time, it will be useful to look at some of the problems it is facing, to put it all into context. And what I heard while in Europe in private meetings is troubling.

All Spain All the Time

Spain is in a recession, though only down an estimated 1.7% in 2012, if things go well. Unemployment is at 23%, which is higher than Greece for the latest Greek data that I can find. But more than half of young Spaniards (over 51%) are out of work, creating a lost generation that has been hardest hit by Spain's economic woes. The total number of unemployed has climbed above five million, and Spanish under-25 unemployment has nearly tripled, from 18% just four years ago..."

at http://www.businessinsider.com/mauldin-the-biggest-thing-that-matters-right-now-is-spain-2012-3#ixzz1qnMxD4LG

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