UK Grows Whilst Eurozone Stagnates

According to a survey of 350 manufacturers carried out by the CBI, Britain's manufacturing sector is growing at its fastest rate for nearly two decades. The Telegraph reports that total order books relative to normal levels were at their strongest since March 1995.

The CBI survey's total order book balance rose to +11 this month to from -4 in October, well above expectations of 0 and the long-run average of -17. 

Meanwhile in the Eurozone things are somewhat different. Markit Economics said that its Eurozone Composite Purchasing Managers Index (PMI) for November (published today) fell to a three-month low of 51.5 points from 51.9 points in October.

France, the Eurozone's second largest economy, is dragging the zone down whilst the other smaller economies are all but stagnant.

Such is the effect of using one economic policy (via the single currency) for multiple economies that face different problems.

The Interminable Rise of Greek Youth Unemployment

In May Greek youth unemployment was almsot 65%, in June it showed a slight "improevment" falling to 58.8%.

However, when compared to previous years the level of youth unemployment has worsened (as per Efthimia Efthimiou):

- June 2012 it was 54.8%
- June 2011 it was 44.4%
- June 2010 it was 31.3%
- June 2009 it was 23.2%
- June 2008 it was 20%

Levels of unemployment such as this are normally associated with third world countries in the midst of a civil war, or the equivalent. Yet Greece is, allegedly, a first world country and is meant to be an "equal" member of a powerful and prosperous economic block (ie the Eurozone).

The reality is that Greece is not treated as an equal, it should never have joined or been allowed to join the Eurozone and the prosperity within the Eurozone is not evenly spread but confined to the wealthy Northern economies.

As such it is clear that as an experiment the Eurozone is destined to fail, indeed the world will be a better place without it. However, with levels of unemployment such as this in Greece the real danger is that of a plague of dictatorships and civil unrest spreading country by country in the Southern members of the Eurozone.

In order to survive as a democracy and civilised society Greece needs to exit the Eurozone now, others such as Cyprus need also to consider their positions. 

The Greek Problem - Two More Bailouts Needed

European Central Bank Governing Council member, Luc Coene, is quoted by Reuters:

"It's clear that we are not yet at the end of the Greek problem. 

We will need to make further efforts, certainly once, perhaps twice more. 

We will see how the situation develops."

My advice to Greece stands, leave the Eurozone and devalue your currency.

Eurozone Out Of Recession?

The media and Europhiles are hugely excited at the headlines today that proclaim that the eurozone is out of recession.

As per the BBC, the eurozone has emerged from recession after a record 18 months of economic contraction.

GDP grew by 0.3% in the second quarter of 2013, slightly ahead of forecasts. Germany and France dragged the eurozone out of the recession with growth of 0.7% and 0.5% respectively. However, Spain experienced contraction of 0.1% on the quarter, and Italy and the Netherlands both saw output drop by 0.2%.

The eurozone cannot survive in its present form where the rich Northern countries prosper whilst the poor Southern ones collapse, just ask the good people of Greece (with close to 65% youth unemployment) if they feel that they are now out of the recession.

Greece Imploding

Greece is continuing on its downward spiral to financial implosion.

To add to the woes of the good people of Greece, on top of last week's truly shocking youth unemployment statistics (close to 65%), Reuters reports that Greece's economy shrank at annual pace of 4.6% in the second quarter, contributing to a slump of more than 20% in real terms since 2008.

Ironically, in the delusional world of economists, these figures were slightly better than the 5% contraction forecast.

Delusions aside, Der Spiegel has blown the whole charade of bailing out the Greek economy wide open. It quoted an internal document prepared by the Bundesbank as saying that Europe "will certainly agree a new aid programme for Greece" by early next year at the latest.

The Bundesbank also described the risks associated with the existing aid package for Greece as "extremely high", and said the approval last month of a 5.8 billion euro aid instalment to Athens had been "politically motivated".

As I have noted many times before, in order to survive as a democracy and civilised society Greece needs to exit the Eurozone now; others such as Cyprus need also to consider their positions. 

Greek Youth Unemployment Close to 65%

Youth unemployment in Greece has risen to a shocking 64.9% in May.

Levels of unemployment such as this are normally associated with third world countries in the midst of a civil war, or the equivalent. Yet Greece is, allegedly, a first world country and is meant to be an "equal" member of a powerful and prosperous economic block (ie the Eurozone).

The reality is that Greece is not treated as an equal, it should never have joined or been allowed to join the Eurozone and the prosperity within the Eurozone is not evenly spread but confined to the wealthy Northern economies.

As such it is clear that as an experiment the Eurozone is destined to fail, indeed the world will be a better place without it. However, with levels of unemployment such as this in Greece the real danger is that of a plague of dictatorships and civil unrest spreading country by country in the Southern members of the Eurozone.

In order to survive as a democracy and civilised society Greece needs to exit the Eurozone now, others such as Cyprus need also to consider their positions.

China's 7% Bottom Line

China's Premier, Li Keqiang, has underpinned global markets by stating that China’s “bottom line” for GDP growth is 7%, and the nation can’t let growth go below that.

Seven percent is not too shabby at all!

I would note that had a similar statement been issued by the ECB, wrt there being a bottom line for growth for the Eurozone (albeit with a bottom line of growth of far less than 7%), no one would have believed it!

The Verdict on Greece

Last week I wrote that Greece had been given a three day deadline to reassure Europe and the International Monetary Fund that it could deliver on conditions attached to its international bailout in order to receive the next tranche of aid.

Unsurprisingly, post deadline, the EU and IMF have given Greece a less than ringing endorsement noting that the outlook for Greece's bailout programme remains uncertain.

Reuters quotes the Troika:

"While important progress continues to be made, policy implementation is behind in some areas.

The authorities have committed to take corrective actions to ensure deliver of the fiscal targets for 2013-14 and achieve primary balance this year.

The mission and the authorities agreed that the macroeconomic outlook remains broadly in line with programme projections, with prospects for a gradual return to growth in 2014. The outlook remains uncertain, however."

As I warned last week, those with money in Greek bank accounts would be advised to withdraw it now before the jackals pounce. 

Greece's Day of The Jackal Looms

Reuters reports that Greece has been given three days to reassure Europe and the International Monetary Fund it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid.

Europe and the IMF are unhappy with the progress that Greece has made towards reforming its public sector and improving its tax collection.

In the event that Greece misses the deadline or its promises fail to assuage its "bankers", then as sure as eggs are eggs the "solution" that was foisted upon Cyprus (ie a raid on bank accounts) will be foisted upon Greece.

Those with money in Greek bank accounts would be advised to withdraw it now, before the jackals pounce. 

Greece Stares Into the Abyss Again

The International Monetary Fund (IMF) is preparing to suspend aid payments to Greece by the end of next month unless eurozone leaders plug a €3bn-€4bn shortfall that has opened up in Greece’s €172bn rescue programme, according to a report in the FT.

The shortfall has arisen as a result of a decision by  eurozone central banks not to roll over Greek bonds they hold, and comes amid signs that even the scaled-back privatisation plan Athens agreed to last year is falling behind schedule.

There is still a chance for Greece to receive the next tranche of aid if it manages to reach a deal with the troika before the end of June. However, the coalition government in Greece is on the verge of collapse as a result of its failure to internally agree on how to resolve the crisis caused by the decision to close the state broadcaster.

As ever with bailouts, they are not solutions but merely vehicles for kicking the can down the round and buying time for the incumbent government to resolve the original crisis. In Greece's case there may well soon be no government to hold talks or resolve the crisis.

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.

The Bungled Bailout

The IMF has issued a report that concludes that the bailout of Greece was bungled, because it was an attempt to save the single currency rather than Greece itself.

Very true indeed.

Unsurprisingly the Gnomes of Brussels flatly reject the report.

Well they would, wouldn't they?

That being said, given that the IMF thinks that the bailout was bungled, why did the IMF agree to participate in bailing Greece out twice?

Third Bailout For Greece?

Jean-Claude Juncker, former Eurogroup chief and Prime Minister of Luxembourg has given an interview to MNI in which he speculates that a third loan to Greece cannot be excluded. 

No surprises there then!

Negative Interest rates

It seems that the ECB is considering negative deposit rates, ie charging banks for their deposits.

The purpose of such a move?

To encourage/force banks to lend money in order to boost the flagging Eurozone economy.

Will it work?

No one knows!

Greek Youth Unemployment Hits 64.2%

In a damning indictment of the Eurozone's economic policies, and of the folly of joining a single currency system, the youth unemployment (18-24) level in Greece has risen to a disgusting 64.2%.

Levels of unemployment such as this are normally associated with third world countries in the midst of a civil war, or the equivalent. Yet Greece is, allegedly, a first world country and is meant to be an "equal" member of a powerful and prosperous economic block (ie the Eurozone).

The reality is that Greece is not treated as an equal, it should never have joined or been allowed to join the Eurozone and the prosperity within the Eurozone is not evenly spread but confined to the wealthy Northern economies.

As such it is clear that as an experiment the Eurozone is destined to fail, indeed the world will be a better place without it. However, with levels of unemployment such as this in Greece the real danger is that of a plague of dictatorships and civil unrest spreading country by country in the Southern members of the Eurozone.

In order to survive as a democracy and civilised society Greece needs to exit the Eurozone now, others such as Cyprus need also to consider their positions.

Oh and by the way, in case anyone cares, today is Europe Day!

Euro Downright Dangerous

Kudos to Lars Seier Christensen, chief executive of Saxo Bank, who has vented his spleen on the Eurozone.

He said that it was clear that the eurozone would eventually break up, as Brussels claimed even more power and used it “ever more poorly”.  He also, wisely and correctly, noted that "short term" capital restrictions are always introduced as "short term" but end up being long term; and warned that there will be many more.

As per the Telegraph, he said:

"Euro denominated assets will remain unattractive, and downright dangerous, to hold for years to come."

A wise man indeed!

Eurozone Unemployment Hits New High

Unsurprisingly, given that monetary policy within the Eurozone is being conducted by unelected and unaccountable anti inflation zealots from the ECB, unemployment levels within the Eurozone hit a record high of 12.1% in March.

The highest increases were registered in Greece (2 1.5% to 27.2% between January 2012 and January 2013), Cyprus (10.7% to 14. 2 %), Spain (24.1% to 26.7%) and Portugal (15.1% to 17.5%) .

Eurostat estimates that there are over 19 million people unemployed within the Eurozone, 3.6 million of them being under 25.

This level of unemployment is not sustainable and is a threat to democracy.

Cyprus Parliament Votes

Today the Cyprus parliament will be finally given an opportunity to vote on the bailout plan imposed on it by the IMF/EU.

Pundits expect that the bill will pass.

However, if it doesn't, the EU/IMF will simply delay the bailout until the parliament votes in favour of it.

"Democracy" in action, the EU way!

Eurozone Economic Sentiment Decreases

Unsurprisingly confidence in the Eurozone fell for a second straight month in April.

The Economic Sentiment Indicator (ESI) decreased by 1.5 points in the euro area (to 88.6) according to the European Commission's latest Business and Consumer Survey results.

"In the euro area, the ESI's decline was broad - based across all business sectors, with services witnessing the sharpest drop, while consumer confidence went up. Among the five largest euro area economies,  economic sentiment worsened significantly in Germany (- 2.3) , France (- 2.0) and Italy (- 1.9), while remaining broadly stable in the Netherlands (+0.2 ) and improving in Spain (+ 0. 9). 

The decrease in industry confidence ( - 1. 5 ) resulted from a much more negative assessment of the current level of overall order books and lower production expectations. Managers' assessment of stocks of finished products remained virtually unchanged. The past production and, to a lesser extent, the current level of export order books, which are not included in the confidence indicator, were also assessed more negatively . 

Services confidence dropped abruptly by 4.1 percentage points, driven by significantly worsened assessments of the business situation and demand over the past three months. Demand expectations deteriorated to a lesser extent. 

Consumer confidence increased by 1.2 points, based on a marked easing of unemployment expectations and slightly better expectations concerning households' future financial situation, the future general economic situation and savings over the next 12 months. Retail trade confidence decreased by one point, driven by worsened business expectations and views on the adequacy of current stocks. The assessment of the present business situation worsened only slightly. Also construction confidence decreased (- 1.3), based on weaker employment expectations and assessment s of order books. 

Financial services confidence (not included in the ESI) improved markedly (+ 5.0), fuelled by considerably better assessments of the business situation and demand over the past three months. Demand expectations improved slightly. Employment plans were revised downwards across business sectors, contrasting with the easing of consumers' unemployment expectations. Selling price expectations decreased in industry, retail trade and construction, and increased marginally in services."

According to the Telegraph, "experts" had forecast a decline to 89.3.

The pressure is now on the ECB to cut rates this Thursday. However, given that the ECB is dogmatically sticking to its anti inflation monetary policy, at the cost of millions of jobs in the Eurozone, I do not expect to see any cut in rates.

Cyprus To Maintain Capital Controls

In a remarkably unsurprising development, Cyprus has decided to maintain capital controls during the summer.

The Eurozone finance ministers and ECB will of course be delighted, as this will enable them to continue to crow that there there has been no bank run in Cyprus.

My sympathies to the people of Cyprus, it will be a long hot summer!