Latest from stats, stimulus front, and interventionism all the way

EUROPE

Unemployment was steady in EU and Eurozone, at 10.4 and 11.3, respectively. The actual number of unemployed has gone up by approximately 2.1 million in the last year. Greece saw its unemployment rate edge up to 24.4 per cent approximately matching Spain’s figures, and both countries have their youth unemployment figures way past 50 per cent.

Finland’s latest seasonally adjusted unemployment figure came in at 7.5 per cent, which is actually pretty good and slightly better than what I had expected; unemployment rate was the same 7.5 per cent in December and January and I have been expecting the trend to be rather worsening than improving. Headwinds now persist though with Finland slumping into a recession coupled with our privilege to fund others’ largesse and less than healthy figures for the past half a year from manufacturing (4 months of double digit declines in new orders for example, and goods balance so far 1.2 billion on the deficit) that still constitutes disproportionately large part of Finland’s economy.

Sweden saw quite the uptick in unemployment with the seasonally adjusted headline rate inching up from 7.5 to 7.8 percent in August. On the PMI side of things, data still point downwards, and I would expect that the next GDP prints are going to show weaker than H1 figures.

Largely, I would expect that we have hit the bottom for labor market in Europe, and thankfully even though the situation has worsened there are no signs of social unrest but rather far more positive reports about people seeking better opportunities by emigrating and taking the measures to their hands to create new ways to make do. By all accounts this will be very positive for Europe.

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On recession prospects

Europe

EU Commission some days ago came out with their downwardly revised economic forecasts now showing -0.3 per cent for this year instead earlier projected growth.

Now I can largely agree with EU Commission on the broad direction of the economy. It took annoyingly long time to get some sanity out of these econ PhDs but once they come out with something that makes sense, I will happily support them.

The premise of deep and long recession in Europe would require war, forced contraction of money supply, abrupt and strong reversal in fiscal policies, massive supply shocks or breakdown of civil order. While the weakest members of the Euro-zone are precisely there, they still constitute a small percentage of European GDP and will not drag the entire continent down with them.  Will Finland, Netherlands, Sweden, Austria, Germany and others take a hit? Yes, but further deterioration will require additional shocks.

Given the actions by the ECB, already deflated real estate bubbles, somewhat steady albeit slow growth in US and the time private sector has already had to reorganize the utilization of resources in more productive areas, I don’t see how there could be a Europe wide deep and prolonged recession. A recession in Europe? Yes. A depression in Greece? Yes. But more interesting question is how much long-term damage have we taken as a result of misguided policies?

One particular interest of mine is Euro-zone’s development as an optimal currency union, because what has happened over the last 5 years or so has definitely pushed the Euro-zone away from this optimum. In 1999 a Nobel Prize in economics was granted to Mr. Mundell for essentially showing that Euro-zone does not work. While the adoption of ESM itself is currency union positive from strict economics perspective, and if you are for some odd reason in favor of removing local democracy through EU and Euro-zone, it is what you should advocate. However, the demise of PIIGS and the potential rise of protectionism certainly do not bode well for the functioning of the common currency area and it was not that fluid to begin with.

Spain

Spain’s figures are somewhat of particular interest as at least:

  1. I don’t really believe in them
  2. Some EU ministers have come out saying that no one believes in them
  3. They announced that unemployment would approach 25% this year
  4. They are expecting 1.7 per cent contraction this year
  5. They are in cross hairs with EU over their planned budget deficit

My problem with their figures is with the 4th quarter real GDP and employment. Their latest figures showed significant deterioration in not only unemployment rate but the absolute number of people that are employed and yet they claimed that their real GDP year-over-year was growing at 0.3 per cent. The employment dropped by over 600,000 people year-over-year on the fourth quarter, that’s about 3.3 per cent of total, a huge drop. In addition to that the PMIs have been deeply negative for some time.

Irrespective of that, they are currently in a recession and Spain’s economy is one that could keep Europe pretty depressed going forward.

Post PSI Greece

Finally Greece has defaulted.

And while this has been a markedly positive development in Europe, I do frown upon the use of the term PSI or private sector involvement, because that pretty strongly implies that private parties losing money on their investments is somehow extraordinary when nothing could be further from the normal state of things. Failure in the form of default and bankruptcy are integral parts of capitalism, and government debt should under no circumstances be treated as risk free, although this is one of the many fallacies that constitute modern finance and economics teaching.

Greece economy is currently a function of reduction in the G component, reduction in C+I due to businesses cutting back, great uncertainty and taxes going up, X-M not improving much because Greece is still fixing their exchange rate against Euro-zone and setting it too high against everyone, bank run and capital flight because of threat of re-denomination and lack of opportunities, corrupt and ultra-inefficient political-legal system, smartest ones leaving the country, rioting making things just a bit worse, severe social stress on top of the economic one, and on the plus side cheap money entering the country.

And while the crystal ball readings from the EU have become more reasoned as of late, some of the worst case estimates that 2013 will be flat to positive seem little out of touch with reality.

Our finance minister Urpilainen even came out some days ago saying Greece is making good progress. Really? In what? Here’s the Greek PMI; it’s at all-time lows, as in the rate of contraction from already depressed levels is at a record.

Japan and UK

Both of these countries are in recession, i.e. the ability to print does not prevent contraction in real GDP.

Japan and UK both have sovereign currencies, the ability to print to cover tax shortfalls. Both of these countries have most certainly done so and both of them have significant budget deficits. Yet, they are both in recession, something that US should probably take note of.

Furthermore, these two countries are the most leveraged economies in the world; UK first, Japan second. Japan is the most indebted government with interest payments about half of tax revenue. UK isn’t doing much better with their government announcing they are out of money and that private sector must push the country to grow if any growth is to materialize.

Japan is in a particularly interesting point with the country possibly entering a longer period of negative trade and current account balance. Japan needs those current account surpluses in order to keep the aging population and government debt and deficit in check. I tend to agree with the “superstar” hedge fund manager Kyle Bass who holds the view that Japan should be on everyone’s radar due to their fiscal, balance of payments and demographics situation.

And I must add that despite the religious fervor with which various mainstream economists, pundits and cheerleader channels proclaimed that in the aftermath of the natural disaster and nuclear meltdown, Japan would soon enter a period of raging V-shaped recovery, the country has continued in recession, much like I somewhat cynically stated back then in Japan GDP drops by 3.7 per cent, double the expected, Keynesian nonsense commences (May 19th):

It seems that those mainstream economists had to come in contact with reality as Japan reported GDP dropping by 3.7 per cent instead of 1.9 like expected in the aftermath of the earthquake. This follows a 3 per cent drop in last quarter and according to mainstream economists the Japanese economy will contract 3.3 per cent this quarter followed by a rapid Keynesian wet dream induced V-shaped recovery on the 3rd and 4th quarters…

…Moreover, the nuclear disaster has not ended, although the mainstream media refuses to report anything about it at this point. In fact, just in the last week or two we have learned that 3 reactors experienced full meltdown almost immediately and that Japanese officials decided to lie about everything. Now, I don’t have any first-hand knowledge nor do I have any idea what is going to happen next, but the worst nuclear disaster ever is not going to be GDP positive, not now, not ever, regardless of what the mainstream economists or anyone else says. In addition, the Japanese now have a quite problematic electricity production problem, which also will not help boost the economy.

I just don’t see the recovery happening.

Interesting how Japan is still in recession for the precise reason I claimed it would and they are in process of shutting down all of their nuclear power plants for some time, thus energy suffocating the country, which surely does not boost growth.

I mean, who knew that broken windows do not increase prosperity?

The US does not look great but recession unlikely

Since the Q3 scare ended up being nothing more than an outlier, the probability of a recession in US is very low notwithstanding some significant turn in policies applied. Employment, industrial production, consumer credit and many other indicators are growing steadily, there is no real estate bubble anymore and corporate sector is doing great. They do have longer-term problems. Employment-to-population isn’t growing, new jobs are part-time and low wage, tax revenues aren’t really growing, pensions are severely underfunded and no one is doing anything about it, fiscal situation is a huge mess, health care is a huge mess, government is practically hostile towards small enterprise in favor of Fortune 500, energy policy is clueless, civil rights have been removed etc. But as much as I would like to believe that stupid decisions and immoral policies make GDP go down, they don’t. A lot of pressure might build up under the surface and the economy might become prone to black swans, but that is of no concern to those seeking public office this year or the next. Returning to free market economics would collapse the GDP and even addressing the pension underfunding would push the country into a recession, so self-deception is probably the way forward. At least the US is better off than Europe or Japan.

Things to watch out

While it is starting to appear as if worst of the downside has happened and the likelihood of either US recession or some deep protracted recession in Europe is very small, there are plenty of things to watch out for before 2013:

  • While various statistics bureaus might be trotting out positive real GDP reports, what you really care about is how much real stuff your hour of labor buys. And if you look at for example the last 10-20 years of real household income development for different quintiles in the US, the picture isn’t that pretty.
  • How long will the financial repression, gradual degradation of our institutional framework and moral hazard suppress our ability to create some sort of real growth? That is, is around 1% growth the new normal? Even with peak liquid fuels being some ways off?
  • How much worse will the bank run from periphery and the imbalance in the Euro system get?
  • The opaqueness of Spain’s debt, deficit, local government, real estate losses and bank balance sheet situation
  • Situation with PIIGS, stubbornness of Troika, French election, Greece’s new parliament, growing xenophobia and protectionism etc. causing a political crisis in Europe
  • French election where they are about to replace bad Sarkozy with bad Hollande. 10 % unemployment and growing political disagreement in EU gives him plenty of room to advance his populist socialist agenda.
  • US-Israel-Iran and oil: definite potential for a big disaster. Since Panetta has now stated that Iran does not seek nuclear weapons and that US will attack if all else fails, an attack seems to be given. Iran might not win, but US will certainly lose just like it lost in Iraq and has been digging itself into an ever-deeper hole in Afghanistan.
  • Oil and gas prices with Brent in euros hitting all-time highs surely not helping Greece nor any other importer
  • Central bank exit strategies or lack thereof (i.e. if you ignore the mandate for stable prices then the equation becomes pretty simple) in addition to the infinite unintended consequences of their singular strategy to loosen monetary policy as a solution to everything
  • Youth unemployment in Greece, Portugal, Spain possibly seeing its worst figures this summer. Will the rioting get worse?
  • Will OWS turn into an Obama re-election campaign? So far it has seemed to be positive on balance. The election itself is a non-event.
  • China’s growth slowing down
  • Canada is one the brighter spots in global economy not least due to their vast non-conventional oil reserves, but they certainly do not need to blow any more hot air into their housing bubble
  • US stocks well on their way into the next bubble-blow-off-top-collapse cycle while Fed promising to keep ultra-low monetary policy for years to come. Nothing could go wrong with that one, right?

As a summary, it is not really difficult to list risks to the growth picture.

A Statesman moment

EU and their talking heads have pretty strongly invested their entire political and social capital into the current form of saving Greece, Portugal, Ireland and Spain. You don’t come out that trench easily; the amount of money, time and political capital invested into the Troika led effort is too great for anyone to back out of it.

Part of me wants to think that soon there is going to be a time for someone to start acting like a real statesman. The opportunity for this certainly exists. I certainly wouldn’t mind if that someone was our new President Niinistö, but it seems he is not interested in being part of the solution. There exist a historic chance to do so, perhaps even an imperative to do so, but the lack of ability to see the error of one’s ways is a burden we’ll probably bear.

I’d like nothing better than to see some actual progress instead of the endless fakery. Finland has an army of bureaucrats that contribute nothing; for example we have 19 cabinet ministers while I am hard pressed to invent a reason for 10 of them. I mean we are a nation of 5.6 million people. On EU level, what did we achieve with the obviously half-assed approach to the economic situation and why are we continuing the obviously misguided centralization of power policy? Why is US continuing their obviously failed foreign policy when they would have been and would still be much better off supporting opposition in Middle East and investing all the money they wasted in illegal wars to fix their broken energy policy at home?

Euro summit, stress tests, EFSF changes, ECB bailouts, ESM and the subsequent failure

Now that the temporary “stability” mechanism is slowly getting its final form in the aftermath of the euro summit after serious of failures, it’s good to look at the different elements. Btw, I hope you have enjoyed the stability these mechanisms have brought to you and the hopium rally that last total of few days and is coming apart with vengeance today.

EURO summit

Key decisions were the 50 per cent haircuts for private investors, leveraging the rest of the EFSF assets up to 1 trillion euros and bank recapitalizations. However, there are also plenty of words about firepower, structural reforms, restoring trust and stability and consolidating fiscal policies amongst EU countries. Moreover, Greece has recently received their next heroine dose.

Here are official statements.

At this point I’d like to quote one of my superior officers in the military. He used to say that “Why should we change something that has never worked?” And he was quite proud of that statement.

Equivalently, Barroso & Co. also seems to be truly proud of what it has achieved here. After all, it is totally plausible that the cause of the problem works as the best cure for the same problem, that taking on more debt fixes the problem, which is the excess amount of debt and repeating what has failed numerous of times simply makes it more likely to work the next time.

At least there is somewhat clear admission that banks are severely under-capitalized and that Greece will not pay back what it cannot pay back. However, that is where the good ends. I am somewhat horrified by the use of the word “firepower” because the last thing I want someone with complete lack of economic understanding to do is to leverage up my tax euros and use it as his personal war chest in manipulating financial market for political purposes. Secondly, it is truly perplexing that EU would come up with one of the most complex credit products ever and apply leverage when most of these types have been complaining banks doing this in the build-up to the financial crisis.

There are sensible actions that should be undertaken immediately that are not in any way included in the statements by the EU. The actions should be carried out at national level where applicable. These include forcing banks to prudentially mark all assets to market values, resolving troubled banks and if they cannot survive as solvent institutions they must be liquidated, terminating employment of incompetent employees at EU and ECB starting with Barroso, unequivocally denying banks all access to taxpayer money, enforcing zero inflation rate policy, enforcing the stability and growth agreement and many others, but most importantly rule of law must be followed without exception.

On that last point, it is sad to point out that of course all these bailout actions have been against the law as the Lisbon Treaty stipulates that:

Article 125

(ex Article 103 TEC)

1. The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.

In my humble opinion bailout of country after country does not even remotely qualify as a “joint execution of a specific project”, because otherwise the whole article would be meaningless and the bailouts are not even joint projects because they exclude non-euro countries.

And since the purpose of the EFSF is to allow Greece and other bankrupt countries to run excessive deficits without the need to balance budgets immediately, it is comforting to know that that is also against the law as the Lisbon Treaty stipulates that:

Article 126

(ex Article 104 TEC)

1. Member States shall avoid excessive government deficits.

And then there is the growth and stability pack. Remember that? Deficits should be below 3 per cent of GDP and public debt below 60 per cent of GDP, otherwise you get punished. Barroso & Co. is even loudly proposing that fiscal discipline should be restored and strictly followed. Given that you might think that EU and the euro zone countries have followed these principles in the past. You would be wrong, because the minute large countries started breaking the rules, they decided that they don’t have to follow the rules. We are paying the price now.

There are plenty of other examples, but these should suffice.

EBA stress test 2.5

The first thing about these stress tests is that why should anyone care after two utter failures? After the previous figures came out, I said they would fail and I suppose this latest set of figures from EBA acts as a formal acknowledgement by them that their work was a failure and that I was right.

Onto the new figures

Once again there is no explanation on why their previous stress tests did not work and there also appears to be no consequences for the failures. This time they are going for 9 per cent Tier 1 capital after sovereign debt write-offs, which starts to be more reasonable capital buffer. The shortfall is now about 106 billion (final sum to be announced after Q3 results), which has to be acquired by the end of June 2012.  The interesting part about this is that it goes beyond and against what Basel III has proposed. It is going to be interesting to see what will eventually be legislated. However, this 9 per cent Tier 1 Capital is not enough. I am expecting to see something like maximum 10-to-1 leverage based on prudentially marked-to-market assets and common equity and separation of deposit-taking institutions and the rest. Furthermore, the figures for French banks seem way too low. Put another way, these measures do not restore my trust at all.

Implications to sovereign CDS

The “voluntary” 50 per cent haircut on private bond holdings and the subsequent decision that this does not constitute a credit event has the interesting consequence that sovereign CDS will become useless, although ISDA claims otherwise. Why would an investor hedge sovereign bond exposure through CDS if it is highly likely that whenever there is an actual chance of sovereign credit event, it will be handled in a manner that will be deemed voluntary and not a credit event?

Considering the fact that the original 21 per cent haircut did not get the expected response, how could a 50 per cent haircut be deemed voluntary? Earlier I did say that EU might actually be doing something sensible by banning naked CDS positions but now something not so great is happening. It appears that going forward selling the cash instrument is the only way to hedge.

Here is the latest from ISDA:

Does the October 26 Eurozone deal for Greece qualify as a credit event?

The determination of whether the Eurozone deal with regard to Greece is a credit event under CDS documentation will be made by ISDA’s EMEA Determinations Committee when the proposal is formally signed, and if a market participant requests a ruling from the DC. Based on what we know from preliminary news reports, the Eurozone proposal is voluntary and not binding on all bondholders. As such, it does not appear to be likely that the deal will trigger payments under existing CDS contracts. In addition, it is important to note that available information for the Eurozone proposal is currently not sufficient for the ISDA Determinations Committee to accept a request to determine whether a credit event has occurred.

Yes, banks are voluntarily accepting the haircuts at gunpoint. Just like I learned in military that being forced to do something is just a one form of volunteering. This is not a done deal yet, but if it goes ahead like ISDA wants, sovereign CDS become useless.

ECB bailouts

The European Central Bank has been buying a lot of sovereign debt lately. The following is a chart of ECB’s weekly assets held for monetary policy purposes since summer 2009. ECB has luckily so far refrained from massive balance sheet expansion unlike the Fed.


Source: ECB weekly financial statements

However, the purchases that appear to be heading into one direction only are starting to go against the law as the statute of ECB stipulates that:

Article 21

Operations with public entities

21.1. In accordance with Article 123 of the Treaty on the Functioning of the European Union, overdrafts or any other type of credit facility with the ECB or with the national central banks in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments.

In addition, the sad thing about these ECB bailouts is that Trichet has repeatedly claimed in public that ECB will not be a lender-of-last resort to troubled countries and that ECB will not monetize sovereign debt and then the ECB goes and does that very thing the next day or later.

If the purpose of these EBC interventions has been to lower the rates on PIIGS’ bonds, they have failed; Italian 10-year just euro time time highs.

Transition into ESM

While the EFSF appears to be an ever-evolving bailout mechanism, it has the undisputed benefit that it is temporary. Unfortunately, the EFSF will be replace by the permanent ESM or European Stability Mechanism. The treaty creating the ESM was signed in July and it will replace the EFSF in July 2013, if national parliaments vote for it, while the EFSF is slowly wound down.

First, let’s look at the legal framework (here is the full treaty) for the ESM, which is quite draconian:

Purpose

The purpose of the ESM shall be to mobilise funding and provide financial assistance, under strict economic policy conditionality, to the benefit of ESM Members which are experiencing or are threatened by severe financing problems, if indispensable to safeguard the financial stability of the euro area as a whole. For this purpose, the ESM shall be entitled to raise funds by issuing financial instruments or by entering into financial or other agreements or arrangements with ESM Members, financial institutions or other third parties.

Funding

The authorised capital stock shall be EUR 700 000 million.

ESM Members hereby irrevocably and unconditionally undertake to provide their contribution to the authorised capital stock, in accordance with their contribution key in Annex I. They shall meet all capital calls on a timely basis in accordance with the terms set out in this Treaty.

The Board of Governors may call in authorised unpaid capital at any time and set an appropriate period of time for its payment by the ESM Members.

The Board of Governors shall review regularly and at least every five years the maximum lending volume and the adequacy of the authorised capital stock of the ESM. It may decide to change the authorised capital stock and amend Article 8 and Annex II accordingly.

If an ESM Member fails to meet the required payment under a capital call made pursuant to Article 9(2) or (3), a revised increased capital call shall be made to all ESM Members with a view to ensuring that the ESM receives the total amount of paid-in capital needed.

During the transitional phase spanning the period from June 2013 until the complete run-down of the EFSF, the consolidated ESM and EFSF lending shall not exceed EUR 500 000 million, without prejudice to the regular review of the adequacy of the maximum lending volume in accordance with Article 10.

My commentary:

To summarize the above, ESM will have 700 billion in authorized capital which is can call from member states at any time. If Finland does not pay, Finland loses its voting rights and other countries must fill the gap. “Filling the gap” continues as long as only Germany is left to pay for everything, but it does not end there as this ESM will be able to increase the authorized capital without any input from national parliaments. ESM can also take as much debt as it wishes as there are no strict limits on capital structure. I would say that this is the final nail on the coffin of national sovereignty since this mechanism is permanent.

Legal status

The ESM, its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that the ESM expressly waives its immunity for the purpose of any proceedings or by the terms of any contract, including the documentation of the funding instruments.

The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.

The archives of the ESM and all documents belonging to the ESM or held by it, shall be inviolable.

The Members or former Members of the Board of Governors and of the Board of Directors and any other persons who work or have worked for or in connection with the ESM shall not disclose information that is subject to professional secrecy. They shall be required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy.

In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate Governors, Directors, alternate Directors, as well as the Managing Director and other staff members shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents.

Within the scope of its official activities, the ESM, its assets, income, property and its operations and transactions authorised by this Treaty shall be exempt from all direct taxes.

My commentary:

If you are curious how exactly these conventions that governments can break the all they want are created, there is your proof. The above also explains how they are going to get away with intentional market manipulation while I would go to jail if I were to engage in similar activity.

If we want the illegality in government to stop and rule of law to be enforced, we but stop creating institutions that are above the law. It is not that hard concept to comprehend.

Conclusions

Insanity defined

No real causes addressed in any way

It takes no expertise what so ever to paper over everything with more debt. Everyone knows it will bring a short-term relief to the liquidity problem, but once the cash infusion runs out we will be in the same hole with the exception that now it is deeper.

Equivalently, it takes just about zero expertise for the central banks to give unlimited free credit to banks and then claim they saved the economy when in reality they rewarded failure and looted those who had been acting responsibly.

The party is already ending, because since the deal was reached one primary dealer has gone bankrupt (How is that even possible?), Greece government is about to collapse and Italy sovereign debt is imploding.

Is any of this really surprising to anyone with even an ounce of common sense and basic understanding of elementary school mathematics?

On the positive side, Greece seems to be going back towards taking control of their own country, although markets are not liking the news.

Italian and UK ministers call for more taxation without representation and destruction of national sovereignty

Inquiring minds are reading Reuters:

Tremonti returned to proposals — rejected in the past by Berlin and Paris — for the creation of common euro zone bonds that would effectively make individual governments debt a common burden.

His British counterpart George Osborne, long a supporter from outside the euro zone of more fiscal integration within the currency bloc, went as far as to say that some form of outright fiscal union was now needed.

The absolute last thing we need is a fiscal union that is just a euphemism for abolishing national sovereignty and introducing more taxation without representation to Europe. The same goes for euro bonds, which would be part of the package where EU, ran by unelected president and foreign minister, would start going deep into debt for global banks and at the same time cede control of the union away from the electorate from whom punitive income taxes would be collected in order to pay the interest on the euro bonds.

Thankfully, many of the bureaucrats are still against this development at this stage. However, one should not underestimate the power of never letting a good crisis go to waste or the problem reaction solution framework. These calls come as we are heading into a recession completely unforeseen by EU heads of state or the ECB, a recession made worse by EU heads of state and the ECB with their endless failed bailouts, worthless stress tests, laughable public statements and market interventions.

Do we really want to give more power to these people? I sure don’t. Are there really no people out there who would want to see power brought back to the national level and given back to the people? Look at Switzerland as a shining example: strong national sovereignty, strong individual liberty, popular voting, negligible taxes, full employment, highest standard of living, stable society. What is so wrong with that?

Industrial production in EU gets a lot weaker, 1.2 per cent monthly drop

From eurostat:

We area nowhere near the pre-recession highs and the recession indicators are mounting with very little out there that could push us to better track aside from figuring out cold fusion.

Here are the monthly changes. Total industry down 1.2 per cent, capital goods down 2.9 per cent and durable goods down 2.2 per cent. In euro area durable goods are down even more, 2.5 per cent.

And here are the annual changes: growth getting pretty weak. 1.7 per cent increase from year ago levels is not impressive at all. 4 months ago the growth rate was at 7.5 per cent. Durable goods at -4.1 per cent. Consumers are losing their trust in future employment and who can blame them (Keynesian politicians probably will).

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