Crisis Over? - Hollande's Delusion

According to Francois Hollande, President of France, the Eurozone crisis is over.

His upbeat and, frankly, delusional view is at odds with reality.

Istat, Italy's statistics office, has released data that shows the recession in Italy is in fact worse than previously thought; with revised figures for the first three months of the year showing that Italian GDP shank by 0.6%, not 0.5% as previously thought.

Eurozone Unemployment Hits 12.2%

Eurostat reports that the rate of unemployment in the Eurozone hit 12.2% in April 2013, up from 12.1% in March. This compares very unfavourably with the levels of unemployment in the UK (7.7%) and the USA (7.5%).

The level of youth unemployment in certain countries is particularly shocking, the highest being in Greece (62.5% in February 2013), Spain (56.4%), Portugal (42.5%) and Italy (40.5%).

As I have said before, this level of unemployment is not sustainable and is a threat to democracy.

Eurozone Languishes In Recession

EU GDP figures have confirmed that the Eurozone is languishing in recession for the second time in four years.

GDP in the Eurozone fell by 0.1% in Q3, having fallen 0.2% in the previous three months.

Meanwhile in Greece the unemployment rate in September rose to 26%, up from 25.3% in August (in September 2011 it was 18.9%).

Not all was doom and gloom, Italy continues to provide "comic relief" in the shape of ex Prime Minster Berlusconi's antics. He is now openly speculating that may well stand for Prime Minister for the fifth time in next March's elections.
 
Market rumours also abound that Mario Monti will resign as Prime Minister today.

Well done Italy for trying to provide a much need distraction form the financial chaos, sadly though this merely adds to it!

Don't Believe The ECB Hype

The markets and some commentators are trying to delude themselves that the ECB will finally do something tangible to "save" the Euro.

ECB President, Mario Draghi, has managed to con some people who should know better into believing that the ECB will conduct a major bond purchasing campaign. In theory the bond buying campaign will reduce the interest rates of Spain and Italy (note Greece is not included, because it has been thrown to the wolves) and thus save the Euro.

However, people are ignoring the two very large elephants in the room:

1 Any such decision and action to buy bonds will not occur until after 12 September, when Germany’s top court rules on the ratification of the ESM. This being over a month away means that Spain and Italy, because of crippling interest rates, will most likely have imploded by them.

2 Germany’s top court may well not ratify the ESM. Even if it does, all 17 eurozone members would need to agree to it as well. Fat chance!

Therefore, don't believe the ECB hype.

The Euro, in its present form, is finished!

The Oncoming Storm - Eurogeddon

Europe is poised to bailout Spain and Italy to the tune of £600BN, and the Telegraph reports that a  Bank of England policy maker has told traders to prepare for a devastating market seizure similar to the collapse of Lehman Brothers.

Batten down the hatches!

Italian Bond Yields Beyond Danger Level

Italian bond yields have gone beyond the 6% danger level this morning.

For why?

No one believes, with good reason. that the Spanish "bailout" will be anything more than a short-term palliative.

The Spanish "Bailout" That Dare Not Speak Its Name

The market "relief" at the Euro100BN Spanish "bailout" that dare not speak its name has been somewhat short lived, Spanish 10-year government bond yields are now back above Friday's close.

For why?

Whilst the Spanish banks may have been saved in the sort term, the fundamentals remain unchanged. Spain has the highest unemployment and the third widest fiscal deficit in Europe, and its government is not regarded as being fiscally competent.

Next in line comes Italy, for which there is not enough money in the Eurozone to bail it out.