[youtube://http://www.youtube.com/watch?v=DNlGfPWTySc 450 300]Comments »
“Spanish data this week will reveal the extent of damage wrought on the euro-area’s fourth-biggest economy as the government fights to cap a swelling deficit that is propelling the country toward requiring international aid.
Retail sales fell 11 percent in September from a year ago, the National Statistics Institute said today. Figures on public finances, consumer prices, and gross domestic product tomorrow may confirm a deteriorating economy and debt profile amid the toughest austerity in its democratic history. The Bank of Spain estimated last week that GDP fell for a fifth quarter.”Comments »
Europe’s Highest Court Says the Bailout Fund Violates EU Law and Should Be Banned From Its Current Form
“The euro area’s 500 billion-euro ($652 billion) bailout fund faces another test as the European Union’s highest court weighs claims that the firewall violates EU law and should be banned in its current form.
A complaint by Thomas Pringle, an independent member of the Irish parliament, has reached the EU Court of Justice, which has the power to topple the European Stability Mechanism, or ESM. Pringle, the European Commission and European Parliament as well as EU nations including Ireland, Germany and France attended a hearing at the court today. A ruling is possible as soon as the end of the year under a fast-track procedure.”Comments »
“European leaders committed to their goal of establishing a euro-area bank supervisor by year-end, opening the prospect of direct aid to Spain’s banks.
The European Union will seek to agree on a framework that makes the European Central Bank the main supervisor by Jan. 1, according to conclusions released early today after leaders met at a summit in Brussels. The new system, intended to break the link between banks and governments at the root of the region’s financial crisis, will phase in over the next year and could cover all 6,000 euro-area banks by Jan. 1, 2014.”Comments »
Weimar Germany after World War One went through one of the worst hyperinflations in history, unleashing untold horrors on the German people and their economy.
Memories of Weimar still haunt the eurozone today. The European Central Bank, widely considered to be the only institution with the firepower to stem the euro crisis, is somewhat restrained by the legacy of the German Bundesbank.
The Bundesbank – established in 1957 (well after Weimar) – for years before joining the euro was extremely conservative in expanding the money supply because of what happened during the Weimar years. And 90 years later, Germans are reminded of the perils of the printing press, whether or not the comparison is truly apt.
Adam Fergusson authored a book on the subject, entitled When Money Dies – and many consider it to be the definitive work on the Weimar hyperinflation.
It used to be out of print and a bit hard to find, but now you can find it in its entirety online.
We summarized the key elements of Fergusson’s book.
“U.K. jobless claims unexpectedly fell and payrolls rose to a record high as the London Olympics helped boost hiring.
Jobless-benefit claims fell 4,000 to 1.57 million in September, the Office for National Statisticssaid today in London. The number of people in work surged 212,000 to 29.6 million in the quarter through August, the highest since records began in 1971. Separately, minutes of the Bank of England’s policy meeting this month showed that officials are divided on the need for more stimulus for the economy.”Comments »
“TOKYO—A weekend gathering of the world’s top finance officials deepened conflicts among some of the largest economies, raising fresh doubts about their ability to find big steps quickly to boost the flagging global recovery.
At the annual meetings here of the International Monetary Fund and World Bank, European officials bickered about the damage caused by austerity; this week they head into a major euro-zone summit with no clear rescue plan for Greece. A territorial row between China and Japan, the world’s second- and third-largest economies, bled into the conference with no sign of resolution, highlighting a new risk to growth. And many top finance officials pointed fingers at the U.S. for casting a new cloud over global markets by failing to make progress on the budget mess in the world’s largest economy”Comments »
Output in the 17-member euro area rose 0.6 percent from July, when it also increased by that amount, the European Union’s statistics office in Luxembourg said today. Economists had projected a drop of 0.4 percent, the median of 36 estimates in a Bloomberg News survey showed. From a year ago, output slipped 2.9 percent after a 2.8 percent decline in July.”Comments »
The Rome-based Treasury sold 3.75 billion euros ($4.8 billion) of its benchmark three-year bond to yield 2.86 percent, more than the 2.75 percent at the last auction of the same securities on Sept. 13. Investors bid for 1.67 times the amount offered, up from 1.49 times last month.”Comments »
“South Korea cut interest rates hours after Brazil as economies around the world shield themselves from the risk of a deeper slowdown driven by weakness in China and austerity measures in Europe.”
“Brazil’s central bank signaled it will keep borrowing costs at a record low for an extended period as President Dilma Rousseff’s administration struggles to revive the economy amid slowing global growth.
In a split decision yesterday, the bank’s eight-member board cut the Selic rate by a quarter point to 7.25 percent, as forecast by 35 of 73 economists surveyed by Bloomberg. The bank said keeping monetary conditions stable for a “sufficiently prolonged period” was the best strategy for balancing inflation risks stemming from a recovery in domestic activity with continued “complexity” in the global economy. Three dissenting members favored leaving borrowing costs unchanged.”Comments »
AFP – A flood of top-end properties are hitting the market as businessmen seek to leave France before stiff tax hikes hit, real estate agents and financial advisors say.
“It’s nearly a general panic. Some 400 to 500 residences worth more than one million euros ($1.3 million) have come onto the Paris market,” said managers at Daniel Feau, a real-estate broker that specialises in high-end property.
While it is not yet on the scale of the Exodus of rich French after the election of Socialist president Francois Mitterrand in 1981, real estate agents said, the tax plans of France’s new Socialist President Francois Hollande are having a noticeable effect.
Read the rest here.Comments »
“A possible bailout for Spain is not imminent, a European Union official said, as concerns grow over the country’s ability to reach its deficit-reduction targets.
There’s no guarantee that Prime Minister Mariano Rajoy will ask for aid from the EU rescue funds and he’s facing a challenge to deliver the budget-deficit cuts pledged, the aide, who asked not to be named, told reporters in Brussels today.
While European Central Bank President Mario Draghi said yesterday the ECB is ready to start buying bonds of sovereigns that qualify for aid, officials from Spain, Germany and now the EU have damped expectations of a rescue this week. Rajoy on Oct. 2 denied reports a rescue request would come this week. Economy Minister Luis de Guindos last night said no bailout was needed.
There’s “a potential slowdown in Spain’s application for a European program,” Thomas Costerg, an economist at Standard Chartered Bank in London, said yesterday by e-mail. “There is a rising fear that the 2013 budget and the stress tests may have been some sort of window dressing to get European assistance.””Comments »
“The European Central Bank kept interest rates on hold today as President Mario Draghi waits for Spain to decide if it needs his help.
Policy makers meeting in Ljubljana, Slovenia, left the benchmark rate at a historic low of 0.75 percent, as predicted by 48 of 52 economists in a Bloomberg News survey. Four forecast a cut to 0.5 percent. Draghi will brief reporters on the decision, taken at one of the ECB’s twice-yearly meetings outside Frankfurt, at 2:30 p.m.”Comments »
“LONDON (Reuters) – Dwindling new orders and faster layoffs marked a worsening decline for euro zone companies last month, according to business surveys that dent hopes the economy will return to growth before 2013.
Wednesday’s purchasing managers indexes (PMIs) suggested it was almost inevitable the euro zone returned to recession in the third quarter.
A good gauge of economic growth, Markit’s Eurozone Composite PMI fell to 46.1 in September from 46.3 in August.”Comments »
“Spanish 10-year government bonds fell, paring the biggest monthly drop in yields this year, before the nation reveals the results of stress tests on its banks as it seeks to avoid a full financial bailout.
The declines pushed the yield above 6 percent for the third day. German bunds extended their longest run of quarterly gains since 1998 even as a report showed euro-area inflation unexpectedly accelerated in September. French bonds headed for a weekly advance as President Francois Hollande’s government delivered its budget. Moody’s Investors Service may announce a review of Spain’s credit rating.”Comments »
“Japanese and South Korean industrial production fell more than economists estimated last month as slowdowns in China and Europe weighed on exports, building the case for more monetary easing.
Japan’s output fell 1.3 percent from July, the biggest decline in three months, a Trade Ministry report showed in Tokyo today. South Korean production slid 0.7 percent, partly on a strike at Hyundai Motor Co.”Comments »
“The unprecedented belt-tightening known as the fiscal cliff that looms over the United States could at the very least cut world growth in half in 2013, Fitch Ratings said on Thursday.
The fiscal cliff — a double whammy of tax increases and spending cuts totaling about $600 billion — could tip the United States and possibly the world into recession, Fitch said.
“The U.S. fiscal cliff represents the single biggest near-term threat to a global economic recovery,” the ratings agency said a research note released in London.”Comments »