Saturday, September 21, 2013

Revisit Europe's Economy - Plan & Results...L&C

The financial debt crisis of 2008 did more than cause a world recession, it exposed the inner finances of nations with not only their banks, but interrelated banking systems.  The EU, now under Mario Draghi, has expressed the thought that the EU will do whatever it takes to return to growth. The US central bank chief, Ben Bernanke gave the world more time to get their houses in order with below inflation credit last Thursday. With that said, let us take a closer look at the results of these QE measures.
Everyone knows that Ireland and Greece were the first to implode under the recession, and both nations received bailout loans. Soon, they were followed by Spain, Portugal and Italy which caused a small riff in the EU as the wealthier northern nation's said that they were being put at risk because the poorer southern nation's could not get their act together. This too passed with time, especially when the effects of the recession hit those same northern nation's. Then, the debt crisis fell off the radar until Cyprus, which by the way, the IMF stated on Friday of last week, is suffering more than first thought. Unemployment grew from 15% to 17%. Not good, considering the haircut that depositors took from the EU, the troika and IMF's response to that nation's banking crisis. So, here's the results.
is the sum total of economic activity in a nation.
Nation                   Growing                                      Declining
Greece                                                                       3.8%
Portugal                                                                     2.1%
Italy                                                                           2.1%
Netherlands                                                               1.8%
Spain                                                                         1.6%
Belgium                                      - 0% -
France                  .3%
Germany              .5%
One other nation, although not a EU member, still part of economic system.
UK                       1.5%
Bottom line: 63% are negative and yet, the EU and IMF always forecast positive growth. Why? You got to make people believe, but when supper's due and you have nothing to eat and then the rent's due or a unexpected bill happens, those beliefs face reality and distrust grows. Not good.
What about the austerity plans and other solutions? The next fact is one that you would never believe, yet it is true. Name the one EU nation to lower its debt in the past year? Greece and this is no Ripley's Believe It or Not. Every and I mean ALL the other nations in Europe increased their debt. This government spending is the reason for some growth or a reason to contain the declining growth. Not good. By the way Portugal's debt increased by 15.3%. This is a total failure and you will be able to see this more clearly when I show you the unemployment picture.
Nation                                                                Unemployment rate
Greece                                                                 27.9%
Spain                                                                   26.3%
Portugal                                                              16.5%
Ireland                                                                13.8%
Italy                                                                    12.0%
France                                                                11.0%
Belgium                                                              8.9%
UK                                                                      7.7%
Netherlands                                                        7.0%
Germany                                                            5.3%
Maybe the above nations should attend a BLS conference to learn how to fudge the numbers?
Last Question
if the EU is a union, how come there are large differences in bond rates? For example, Greece pays 9.6% on a ten year note while Germany only pays 1.94%.  Wake Up, Greece! You are being exploited to lower the value of the euro which allows the northern economies to export more at a lower cost. The EU wants to you end your sovereignty and until you do, they say you have to bare the costs of borrowing on your own merits, but we're here to help. Like I've stated before, leave the EU and form a new union with the southern nations where you can utilize the one benefit that you got, a lower value currency. You would be able to export more, lower your unemployment and maybe, just maybe achieve some real growth without government spending which only increases your debt picture.
Liars and Crooks: goes to the BLS, again! They stated that the August employment picture increased by 162K jobs, only to have that figure quietly revised lower by104K. Can you believe a miss by over a hundred thousand?!

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