AuthorTopic: Europe: Canary in the Coal Mine  (Read 2150 times)

Guest

  • Guest
Europe: Canary in the Coal Mine
« on: January 11, 2014, 03:30:24 AM »

Off the keyboard of Michael Snyder


Follow us on Twitter @doomstead666

Friend us on Facebook


Published on Economic Collapse on January 8, 2014


http://www.newsbomb.gr/media/k2/items/cache/723a06ad4797752abf474da6d464f92a_XL.jpg


Discuss this article at the Economics Table inside the Diner


If You Are Waiting For An “Economic Collapse”, Just Look At What Is Happening To Europe


European UnionIf you are anxiously awaiting the arrival of the “economic collapse”, just open up your eyes and look at what is happening in Europe.  The entire continent is a giant economic mess right now.  Unemployment and poverty levels are setting record highs, car sales are setting record lows, and there is an ocean of bad loans and red ink everywhere you look.  Over the past several years, most of the attention has been on the economic struggles of Greece, Spain and Portugal and without a doubt things continue to get even worse in those nations.  But in 2014 and 2015, Italy and France will start to take center stage.  France has the 5th largest economy on the planet, and Italy has the 9th largest economy on the planet, and at this point both of those economies are rapidly falling to pieces.  Expect both France and Italy to make major headlines throughout the rest of 2014.  I have always maintained that the next major wave of the economic collapse would begin in Europe, and that is exactly what is happening.  The following are just a few of the statistics that show that an “economic collapse” is happening in Europe right now…


-The unemployment rate in the eurozone as a whole is still sitting at an all-time record high of 12.1 percent.


-It Italy, the unemployment rate has soared to a brand new all-time record high of 12.7 percent.


-The youth unemployment rate in Italy has jumped up to 41.6 percent.


-The level of poverty in Italy is now the highest that has ever been recorded.


-Many analysts expect major economic trouble in Italy over the next couple of years.  The President of Italy is openly warning of “widespread social tension and unrest” in his nation in 2014.


-Citigroup is projecting that Italy’s debt to GDP ratio will surpass 140 percent by the year 2016.


-Citigroup is projecting that Greece’s debt to GDP ratio will surpass 200 percent by the year 2016.


-Citigroup is projecting that the unemployment rate in Greece will reach 32 percent in 2015.


-The unemployment rate in Spain is still sitting at an all-time record high of 26.7 percent.


-The youth unemployment rate in Spain is now up to 57.7 percent – even higher than in Greece.


-The percentage of bad loans in Spain has risen for eight straight months and recently hit a brand new all-time record high of 13 percent.


-The number of mortgage applications in Spain has fallen by 90 percent since the peak of the housing boom.


-The unemployment rate in France has risen for 9 quarters in a row and recently soared to a new 16 year high.


-For 2013, car sales in Europe were on pace to hit the lowest yearly level ever recorded.


-Deutsche Bank, probably the most important bank in Germany, is the most highly leveraged bank in Europe (60 to 1) and it has approximately 70 trillion dollars worth of exposure to derivatives.


Europe truly is experiencing an economic nightmare, and it is only going to get worse.


It would be hard to put into words the extreme desperation that unemployed workers throughout Europe are feeling right now.  When you can’t feed your family and you can’t find work no matter how hard you try, it can be absolutely soul crushing.


To get an idea of the level of desperation in Spain, check out the following anecdote from a recent NPR article


Having trouble wrapping your head around southern Europe’s staggering unemployment problem?


Look no further than a single Ikea furniture store on Spain’s Mediterranean coast.


The plans to open a new megastore next summer near Valencia. On Monday, Ikea’s started taking applications for 400 jobs at the new store.


The company wasn’t prepared for what came next.


Within 48 hours, more than 20,000 people had applied online for those 400 jobs. The volume crashed Ikea’s computer servers in Spain.


Of course that should kind of remind you of what I wrote about yesterday.  We are starting to see this kind of intense competition for low paying jobs in the United States as well.


As global economic conditions continue to deteriorate, things are going to get even tougher for those on the low end of the economic food chain.  Poverty rates are going to soar, even in areas where you might not expect it to happen.  In fact, one new report discovered that poverty has already been rising steadily in Germany, which is supposed to be the strongest economy in the entire eurozone…


A few days before the Christmas holidays, the Joint Welfare Association published a report on the regional development of poverty in Germany in 2013 titled “Between prosperity and poverty—a test to breaking point”. The report refutes the official propaganda that Germany has remained largely unaffected by the crisis and is a haven of prosperity in Europe.


According to the report, poverty in Germany has “reached a sad record high”. Entire cities and regions have been plunged into ever deeper economic and social crisis. “The social and regional centrifugal forces, as measured by the spread of incomes, have increased dramatically in Germany since 2006,” it says. Germany faces “a test to breaking point.”


Of course poverty continues to explode on this side of the Atlantic Ocean as well.  In the United States, the poverty rate has been at 15 percent or above for three years in a row.  That is the first time that this has happened since the 1960s.


And this is just the beginning.  The extreme recklessness of European banks such as Deutsche Bank and U.S. banks such as JPMorgan Chase, Citibank and Goldman Sachs is eventually going to cause a financial catastrophe far worse than what we experienced back in 2008.


When that crisis arrives, the flow of credit is going to freeze up dramatically and economic activity will grind to a standstill.  Unemployment, poverty and all of our current economic problems will become much, much worse.


So as bad as things are right now, the truth is that this is nothing compared to what is coming.


I hope that you are getting prepared for the coming storm while you still can.



Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 38947
    • View Profile
Re: Europe: Canary in the Coal Mine
« Reply #1 on: January 22, 2014, 11:21:54 PM »
A few weeks ago, Ambrose was telling us how problems were resolved and a new Era of Growth was coming.

This week he is Hobknobbing with the Illuminati in Davos and the spin is the Eurotrash will Crash::)

Main question is why does he pitch one spin one month, the other the next?  What is the objective of the Illuminati in sending out a different signal each month, other than to confuse the issues?

RE

Crippled eurozone to face fresh debt crisis this year, warns ex-ECB strongman Axel Weber

Ex-Bundesbank head Axel Weber expects fresh market attacks on eurozone this year and economist Kenneth Rogoff says the euro was a "giant historic mistake"


Axel Weber, the former head of the German Bundesbank, said: "Markets are currently disregarding risks, particularly in the periphery." Photo: Bloomberg

By Ambrose Evans-Pritchard, in Davos

5:04PM GMT 22 Jan 2014

Comments164 Comments

A top panel of experts in Davos has poured cold water on claims that the European crisis is over, warning that the eurozone remains stuck in a low-growth debt trap and risks being left on the margins of the global economy by US and China.

Axel Weber, the former head of the German Bundesbank, said the underlying disorder continues to fester and region is likely to face a fresh market attack this year.

"Europe is under threat. I am still really concerned. Markets have improved but the economic situation for most countries has not improved," he said that the World Economic Forum in Davos.

Mr Weber, now chairman of UBS, said the European Central Bank's stress test for banks in November risks setting off a new sovereign debt scare, reviving the crisis in the Mediterranean countries.

"Markets are currently disregarding risks, particularly in the periphery. I expect some banks not to pass the test despite political pressure. As that becomes clear, there will be a financial reaction in markets," he said.

Harvard professor Kenneth Rogoff said the launch of the euro had been a "giant historic mistake, done to soon" that now requires a degree of fiscal union and a common bank resolution fund to make it work, but EMU leaders are still refusing to take these steps.

"People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can't leave this twisting in wind for another five years," he said.

Mr Rogoff said Europe is squandering the "scarce resource" of its youth, badly needed to fortify an ageing society as the demographic crunch sets in.

While Europe still has great skills in technology and an established rule of law that is the envy of most emerging market states, it risks loasing footing as a major player in the global economy.

"If these latent technologies are not realised, Europe will wake up like Rip Van Winkel from a long Japan-like slumber to find itself a much smaller part of the world economy, and a lot less important."

Mr Rogoff said debt write-downs across the EMU periphery "will eventually happen" but the longer leaders let the crisis fester with half-measures, the worse damage this will do to European society in the end.

Mr Weber, who resigned from the Bundesbank and the ECB in a dispute over euro debt crisis strategy, said new "bail-in" rules for bond-holders of eurozone banks will cause investors to act pre-emptively, aiming to avoid large losses before the ECB issues its test verdicts.

"We may see that speculators do not wait until November, but bet on winners and losers before that," he said.

The danger is that bank strains will turn the spotlight back on those sovereign states that cannot easily afford to shore up their banking systems. While he did not name any country, Spain, Italy, and Portugal are viewed as vulnerable. Even Ireland may be at risk again with a debt ratio of 125pc of GDP. "This is the key issue this year," he said

Mr Weber warned EU leaders not to have "dangerous delusions" or become complacent about recovery. "Things feel better than they are. The recovery too weak to generate jobs. It's not about whether things are improving: the levels of growth, jobs, and GDP are way worse than before the crisis," he said.

He said the issue of whether Germany is doing better than France is a distraction since the whole of EMU is doing badly. "The music is now playing in the US and in China. There is a whole world out there that is more competitive," he said.

Sir Martin Sorrell, head of Britain's WPP, said Europe is abandoning the field to a new world order dominated by a "G2" of the US and China, flanked by the rising economies of the BRICS (Brazil, Russia, India, China, and South Africa) and the `Next Eleven'. "The US and China will become the two dominant economies unless Europe changes," he said.

France is still in the "downstroke of the U" and although Spain is recovering, this is not enough to head off a political crisis stemming from mass youth unemployment (57pc). "Technology is now militating against labour, so inequality and unemployment are going to get worse," he said.

Sir Martin said the eurozone is pursuing a reverse "Phillips Curve" - the trade off between jobs and inflation - as if it were testing "what level of unemployment it is prepared to tolerate for zero inflation".

Pierre Nanterme, chairman and chief executive officer of Accenture, said Europe is losing the great battle for competitiveness, and risks a perma-slump where debt burdens of 100pc of GDP prevent governments breaking free by investing in skills and technology.

He said Europe is falling further behind as the US basks in cheap energy and pours funds into cutting-edge technology. "A lot is at stake. If in 12 to 24 months no radical steps are taken to break the curse, we might have not just five, ten, but twenty years of a low-growth sluggish situation in Europe," he said.

Mr Rogoff said it would be much easier for Europe to cope if the euro exchange rate was $1.10 to the dollar rather than $1.35, up 8pc in trade-weighted terms in the last 18 months.

Mr Weber retorted that the euro will come down to earth as the tightening by the US Federal Reserve and other central banks leave Europe as the odd man out. "The ECB has an easing bias. Fast forward another year or two, and relative monetary policy will become obvious to everybody," he said.

By then it may be too late.
Save As Many As You Can

Offline WHD

  • Administrator
  • Sous Chef
  • *****
  • Posts: 3177
    • View Profile
Re: Europe: Canary in the Coal Mine
« Reply #2 on: January 23, 2014, 08:35:02 PM »
A few weeks ago, Ambrose was telling us how problems were resolved and a new Era of Growth was coming.

This week he is Hobknobbing with the Illuminati in Davos and the spin is the Eurotrash will Crash::)

Main question is why does he pitch one spin one month, the other the next?  What is the objective of the Illuminati in sending out a different signal each month, other than to confuse the issues?

RE

I read that article, and I hear two Illuminati pigmen telling their fellow pigmen, "the script is, the risk is at the periphery. Make certain all the big players pass the sniff test. Declare a few peripheral players unsound and we will scoop them up ;) ;)"

See, the article last month was to set the seed of growth in the psychology of the market. Now, but if not for those peripheral players...everything would be fine.

Actually, I read that first line, and I was like, how does anyone take these guys seriously?  :icon_scratch:

Quote
A top panel of experts in Davos has poured cold water on claims that the European crisis is over, warning that the eurozone remains stuck in a low-growth debt trap and risks being left on the margins of the global economy by US and China.
LOL.  ::)

WHD

Offline jdwheeler42

  • Global Moderator
  • Sous Chef
  • *****
  • Posts: 3332
    • View Profile
    • Going Upslope
Re: Europe: Canary in the Coal Mine
« Reply #3 on: January 23, 2014, 08:55:43 PM »
Quote
A top panel of experts in Davos has poured cold water on claims that the European crisis is over, warning that the eurozone remains stuck in a low-growth debt trap and risks being left on the margins of the global economy by US and China.
LOL.  ::)
LOL indeed.... in this race to the bottom, being left behind might not be such a bad thing.... when those with the fastest "growth" are the ones who pile on the debt the quickest, being slow in "growth" doesn't sound so bad....
Making pigs fly is easy... that is, of course, after you have built the catapult....

 

Related Topics

  Subject / Started by Replies Last post
13 Replies
1768 Views
Last post October 14, 2015, 05:41:08 AM
by azozeo
0 Replies
556 Views
Last post April 09, 2016, 12:23:13 AM
by Guest
2 Replies
1112 Views
Last post July 11, 2017, 03:16:37 PM
by agelbert