Just in Time for ECB Rate-Hike Meeting: Eurozone Services Inflation Spikes to New Record. Overall Inflation Re-Accelerates

These nasty surprises just keep coming when inflation is broadly entrenched in the economy.

By Wolf Richter for WOLF STREET.

In the 20 countries that now use the euro, the annual rate of inflation in services rose to 5.2% in April, another record in the data going back to 1997, according to the preliminary data released by Eurostat today. Another nasty surprise, another sign that inflation has now shifted deeply into the economy in a fundamental way, despite sharp price drops of energy goods and some durable goods.

Services inflation is the biggie. The majority of what consumer spend their money on goes to services. They include healthcare, education, housing, insurance, telecommunications, streaming, subscriptions, air fares and lodging, restaurant meals, repairs, cleaning, financial and legal services, haircuts, etc.

Inflation is difficult to control once it reaches services. This is made worse because a number of these services are essentials that consumers cannot dodge or substitute or go without.

The biggest cost component for many services are wages, which have been increasing in the Eurozone. Service providers are now able to pass these increased costs to consumers via higher prices, and in this manner feed into services inflation.

The “core” Consumer Price Index without energy – excludes energy products, such as gasoline, diesel, electricity, natural gas piped to the home, heating oil, etc. – at 7.5%, was a tad off its monstrous record in the prior month (7.9%), and was still nearly four times as high as the ECB’s target of 2%.

This “core” CPI without energy and the services CPI have been invoked repeatedly by ECB President Christine Lagarde and ECB governors as reason for continued rate hikes. The wage component of services inflation has reached a point where Lagarde has gingerly mentioned the connection as a worrisome trend.

The overall CPI rate re-accelerated to 7.0% in April compared to a year ago (from 6.9% in March). On a monthly basis, the overall CPI surged 0.7% in April from March, another nasty surprise.

The plunge in energy prices last year and early this year, that pushed down the overall CPI, seems to have largely bottomed out. Food inflation slowed to a still red-hot 13.6% (from 15.5% in the prior month).

Overall CPI Inflation in the Eurozone began surging in early 2021, a year before Russia’s invasion of Ukraine. In October 2021, months before Russia’s invasion of Ukraine, the Eurozone inflation rate surpassed prior records.

This came after years of reckless money printing and interest-rate repression – the Eurozone was part of the negative-interest-rate-policy absurdity. All this was amplified during the pandemic by large-scale government deficit spending directly into the consumer economy. And voilà.

The sharp drop in the overall CPI from the peak of 10.6% in October was driven mostly by the collapse in energy prices that now seems to have bottomed out:

Oh-là-là, the ECB meeting. On May 4, Lagarde will emerge from the ECB policy meeting and ruminate about services inflation that just keeps getting worse, and she’ll grumble about core inflation being “very high,” and that it doesn’t seem to be coming down, and she’ll have lots of reasons to be hawkish.

Her hawkish enthusiasm will be damped by the potential banking issues and tightening credit conditions due to these banking issues, and the hopes that these issues will take some of the burden off the ECB, and that rates might not have to rise as high as they would otherwise to get this inflation under control.

Inflation by Eurozone country.

CPI by Eurozone Country, Apr. 2022
1 Latvia 15.0%
2 Slovakia 14.0%
3 Lithuania 13.3%
4 Estonia 13.2%
5 Austria 9.6%
6 Slovenia 9.2%
7 Italy 8.8%
8 Croatia 8.8%
9 Germany 7.6%
10 France 6.9%
11 Portugal 6.9%
12 Malta 6.5%
13 Finland 6.4%
14 Ireland 6.3%
15 Netherlands 5.9%
16 Greece 4.5%
17 Spain 3.8%
18 Cyprus 3.8%
19 Belgium 3.3%
20 Luxembourg 2.7%

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  87 comments for “Just in Time for ECB Rate-Hike Meeting: Eurozone Services Inflation Spikes to New Record. Overall Inflation Re-Accelerates

  1. jon says:

    Thanks for the report.

    More reasons for ECB to pause or cut rates.

    WR and his readers are the only ones seeing this inflation and malaise of qe/low rates.

    The stock market, asset market, treasury, FED and media sees disinflation.

    • Wolf Richter says:

      You mean “NOT to pause or cut rates”?

      • jon says:

        Apologies,, I meant it in a sarcastic way.

        Sorry bad at joking.

        • Wolf Richter says:

          Ooops. I see now. It’s funny. I’m just a little slow today.

        • InLimbo says:

          Sarcasm is best done face to face when you can judge a person’s mannerisms by what they truly mean.
          Being Buddhist, an important teaching is to hear and respond to what is said. NOT what you might infer.
          If writing sarcasm, it is best to indicate such. One, quick, common form is using “/s” to indicate sarcasm.
          PLUS, there are some people who are very literal. And there is nothing wrong with that.

      • Depth Charge says:

        No, you missed his sarcasm. And he’s right. Despite all of the evidence of raging inflation, the central banks are looking for any reason to slow down rate hikes or actually cut.

        From the very first rate hike, the filthy greedheads who have hijacked the worlds’ economies have been screaming about a pivot and rate cuts. Go to any MSM financial new site and you will see “pivot” and “rate cut” even today.

        • Wolf Richter says:

          Funny thing, the Reserve Bank of Australia today un-paused.

          People thought that after a brief pause, what would come next would be rate cuts — because in the past, that’s how it worked. And today, the RBA hiked by 25 basis points, which shocked everyone.

          Is the Bank of Canada next to un-pause?

          I think it’s getting pretty clear now to all of them that this inflation isn’t just going away on its own.

        • Juliab says:

          So, Is the Bank of Canada next to un-pause?

        • Depth Charge says:

          “I think it’s getting pretty clear now to all of them that this inflation isn’t just going away on its own.”

          But it was crystal clear even before they paused. Every pause or tiny hike just guarantees inflation rages for a longer duration and becomes more entrenched.

          The pauses and the tiny hikes are designed to drag it out longer. That’s what they want. They don’t want to do what is necessary. They are derelict in their duties. They should be FIRED.

    • Lucca says:

      This is why I no longer watch most of the news and go straight to Wolfstreet when I want to find out what’s REALLY going on in the financial and housing markets.

      • Harry Houndstooth says:

        Pure wisdom dispensed daily.

        Set your compass by Wolfstreet.

      • kam says:

        News ? Isn’t that some arcane concept before massaging, deleting and out-and-out propaganda?
        Solid, unsullied news simply does not exist.
        For Europe, the hurried, emotional response to their largest, most reliable and lowest cost energy supplier has determined their fate.
        Interest rates are secondary.

      • Swamp Creature says:

        I trust WS more than any other news source. The one problem I have though is that WS gets a lot of the data in these posts from the government. And I believe you can’t trust the government for anything especially accurate data. For example, I observe this here with regard to food price inflation which contradicts the governments figures. I look at the 15 items I buy regularly every week. They are up over double digits, and some are up 20 to 25% YoY. The same is true for services. For example, my Sear home appliance ins is up 25% YoY. BC/BS Health ins up 9%. Property taxes going up 15%. So where do they come off publishing a 5% YoY inflation rate. It’s total BS!

        • Wolf Richter says:

          A lot of our food prices have come down, including meat across the board with prices down quite a bit from a year ago. Fruit and veggie prices are down too. Housing costs have come down too in San Francisco, lots of prices have come down, gasoline, electronics, etc.

          That’s why I don’t pay attention to anecdotal stuff; it’s all over the place. Inflation on Wolf Street is treated as overall phenomenon, not your personal inflation. Everyone is looking at different prices. But they average out somewhere.

        • Swamp Creature says:


          RE prices here in the Swamp are starting to go up again. Both Sale prices and rental prices. They never really went down much. We’re working 18 hours days. We’re turning away work. The only thing going down is commercial RE. We use your data in our Appraisal Reports.

          True, energy/gas prices have gone down. But even my “Gas Station from Hell” didn’t lower prices. They kept them the same. They are price gauging.

          I pay a lot of attention to anecdotal stuff. It’s usually very accurate. Just my preference.

        • MM says:

          Swamp Creature – you bring up a good point, property tax inflation.

          My property tax bill went up 10% last year, even though my house isn’t any different – another example of being charged more for the same thing.

    • Harry says:

      My Finance Professor some 50 years ago heavily taught us to be concerned about percentage comparisons, including inflation. He would always say (1) percent means nothing by itself and you cannot buy any thing with a percentage point and (2) percent of what is critical knowledge and easily manipulated whether attacking or defending.

      The ballyhoo of a lower inflation of 5.2% if calculated vs a year ago, looks/sounds lower than say the say 8% of a year ago. But 5.2% with the 8% is not a lowering but a fogging of facts. Comparing to 2 and 3 years ago vs one year ago tells a more accurate story.

      The assumption is that I know something. Guide yourselves accordingly please.

      • Appletrader says:

        Wait til the masses realize these numbers compound! 🧠

        • phusg says:

          Far too many never really grasped the exponential growth of the last pandemic virus, refusing to hit it’s spread hard and early, so I’m not expecting too many light bulbs on the inflation front either.

          Probably just more lazy conspiracy theories, whilst the vast majority were more than happy with the easy money the authorities provided after the financial crisis and during the pandemic.

  2. LordSunbeamTheThird says:

    Looks like France which has a 50%+ tax rate and can’t raise their retirement age past eleven and a half, is joining Italy and core inflation is a horror show.

    The whole thing held together only by whats going to end up presumably as a transfer from northern (i.e.Germany) to the others.

    BUT! is the EU banking system worse than the US banks. I personally don’t know however I would say that Americans broadly speakly seem to be much more hands on and self-responsible for their money, having stock market holdings etc but in Europe and the UK these are all very unusual. The money heads off to a pension fund which predominantly buys government bonds or highly rated assets. So the US population (it seems to me) is much more likely to react -first- and the EU will find support from that i.e. euro citizens will stay complacent longer. Plus clearly the EU wants to throw Ukraine under a bus to get cheap energy from Russia which will I am sure will happen this year.
    Also in that chart of high inflation, its only the rate of Italy Germany and France thats relevant, the other countries are relatively tiny and you can argue that they have high rates of inflation because they are catching up with modern EU economy wages.
    Anyway my point is that its not necessarily the case that this will show up as Euro weakness against the dollar which is the only exchange rate that matters.

    • phusg says:

      > Plus clearly the EU wants to throw Ukraine under a bus to get cheap energy from Russia which will I am sure will happen this year.

      What a load of bull. The EU has massively supported Ukraine’s war effort. Ok, they could do more and resupply quicker if they really want Ukraine to crush Russia, but without the EU’s support Russia would probably have captured Kiev by now.

    • KGC says:

      The EU banks never really cleaned up their bad debt from the last time. They can’t; if they did that asset they have loans out for would drop too far. They made loans against unrealistic values, especially in real estate, and a major adjustment to real market value would wipe out the banks, and the countries using those valuations to prop up their taxes. There are tens of thousands of empty and unfinished buildings that will never be worth the value of the loans against them all over Europe, and they have been propping those values up for decades.

  3. Harry Houndstooth says:

    I expect the ECB will keep increasing interest rates, at least until it is obvious that something is badly broken. History has shown us that the bottom falls out of the stock market when central banks start to decrease interest rates.

    I’m just in it for the money.

    • Juliab says:

      The ECB will certainly continue to raise interest rates, the question is whether by 0.25 percent or by 0.50 on May 4.

    • andy says:

      Perhaps even earlier. The four horsemen holding this market together (NVDA, MSFT, AAPL, LLY) are spiking up. These have to go higher faster – to justify risk. Same happened with FANGMAN the last time around. It looks like Tesla have given up. And of course regional banks are tanking. Good luck.

      • andy says:

        KRE is new 52-week low today.

      • Captainpeacock says:

        I remember the four horsemen of the internet during the tech bust of 2000. They were unstoppable and the bluest of the blue. Only Microsoft has eclipsed it’s old high made 23 years ago.

  4. ChrisR says:

    German inflation, 7.6%. They got to be freaking out! (Higher than the French as well.) Better not show ’em one of your “Debt out the wazoo!” charts. The “YoY change” and “without energy” charts bear an ominous similarity.

    • BuySome says:

      He needs to fix the spelling to have Italia and Germania. In that way the entire top of the list can be classified as Holy Shitia!

  5. Publius says:

    Remember when inflation started its rise and the experts emphasized the low base effect to downplay the danger? Now that we have a high base effect, there is no mention of it

    • Wolf Richter says:

      Yes, it’s funny how what works, isn’t it?

    • Flea says:

      Until they kill wage inflation,there will be no cuts, got to keep peasants .broke

      • grimp says:

        You have it backwards.

        Killing inflation helps the “peasants” (your term).

    • SWE Josh says:

      I have an excuse since I am no expert but I am still very surprised that the base effect isn’t playing a larger role in bringing down inflation. Einstein said something to the effect that “Compound Interest is The Most Powerful Force in The Universe” and it is hard to imagine multiple years of 6% inflation on top of each other.

      • Thunder says:

        Just use Rule 72 and it will show you how urgent it is to put the Inflation Genie back in the bottle.
        It will eat everything you thought you had and even worse your future hopes and dreams.

        • JimW says:

          Under the Rule of 72 inflation running at 6% annually will double the price level in 12 years. It will also reduce the government’s real debt burden as of today by 50% 12 years from now. The latter is a big incentive for the government to keep inflation running hot; it’s a slow
          motion default on sovereign debt.

  6. Michael Engel says:

    1) When the Fed raise rates your money entered the Fed roach motel. The Fed can print money without limitations. We owe the money to ourselves. The proof : since 1973 M2 trend is up without a dents. In 2020 M2 went vertically up. The Fed printing machine worked overtime.
    Option #2 : no printing. Follow the money : your money was rotating in a system control with a positive feedback loop in repetitions.
    2) In 2020 US was comatose until we know what we don’t. The Fed raided
    our banks accounts, sent the money to the gov to finance it’s debt.
    The gov sent us unemployment and stimulus checks to save us from the starvation.
    3) We couldn’t travel, visit a dentist, see NFL games, eat in restaurants,
    theaters & shows, buy a car… We deposited our money in the banks.
    the Fed raided in and sent the money to the gov to financed higher debt.
    The gov sent us more stimulus checks, more unemployment checks, PPP loans….We didn’t pay rent/mortgages/student loans. We put the money in the banks. The Fed raided in repetitions to finance, a debt tsunami.
    4) We spent the money. It’s almost gone. If the gov need another $5T, there will be no cash tsunami #2. The system control is already broken. The feedback loop was dissected ==>
    from banking crisis to sovereign crisis.

  7. Mike r. says:

    Eurozone inflation is at least in part due to their loss of cheap Russian energy. Interest rates won’t fix that.

    • Juliab says:

      With respect, this is complete nonsense that the local politicians constantly repeat. No, the inflation in Europe is entirely due to the insane printing of money and the ridiculous policy of negative interest rates. If Marx had known what would happen to capital in the 21st century while he was writing ” Capital”, he would have laughed himself to death

      • Jon W says:

        As I’ve commented before, I believe the play they’re going for is to feed this line to the masses. When the Ukraine energy price surge drops out of the 12m moving average, it will force down headline inflation – even if core inflation is still rising – for a few months. They hope this will create momentum, and people will believe that the inflation is now quickly coming back down thanks to the central banks.

        Slap in another rise in autumn when the surge has mostly dropped out, and hope that the workers accept smaller pay rises and the whole thing calms down.

        Personally I think it will fail spectacularly, but I suspect this is the plan right now.

    • Wolf Richter says:

      Mike r.,

      READ THE ARTICLE!!! I’m so tired of this dumb stuff. Energy price COLLAPSED, and what is driving inflation is SERVICES.

      • Gattopardo says:

        Hold on here. Since inflation is sticky, and can operate on a lag (like the way it took awhile after printing money for inflation to show up, and then it showed up bigly),.,,, the spike in energy prices could very well be a factor here. It was a component that stacked on top of other factors we all know too well, and contributed to raging inflation. Once kicked off, inflation bled over to services for obvious reasons.

        So it’s not incorrect to say energy prices have a hand in today’s inflation, even though there current price of energy is way down.

        • Wolf Richter says:

          The Energy CPI was up over 40% yoy last year at the peak, now it’s up 2.5% yoy, which is BELOW overall CPI (7.0%) and therefore Energy pushed down overall CPI.

          You can see this clearly if you look at the core CPI without energy — so all items less energy: It’s HIGHER (7.5%) than overall CPI (7.0%) because energy isn’t included in core, and energy inflation has vanished.

        • Gattopardo says:

          @ Wolf,

          I get that, no disagreement. Maybe you’re not getting my point. Today’s inflation, whatever the %, may have been at least partially triggered by energy prices. Once rolling and shifted to services, energy prices could go negative, and yet still would be partially responsible for ongoing inflation. Just like QE, long gone now, is still the cause (trigger) of current inflation.

        • Wolf Richter says:

          Inflation is very complex and dynamic. Thank god energy prices have collapsed. Inflation would be a freak show if oil were at $150 now.

          Look at the chart with the green marker. Eurozone Inflation had spiked to 6% before any of the Ukraine stuff happened in Feb 2022. Inflation was unleashed in late 2020 and early 2021, and just took off. In the early days of it, it involved durable goods — motor vehicles, appliances, tools, bicycles (I mean even rowing machines), etc. — due to the supply chain issues. Energy prices then came on top of it. All kinds of other products piled in. Then goods prices topped out and many began to fall. Energy prices crashed. ENERGY PRICES ARE NOW HOLDING DOWN INFLATION.

          The plunge in energy prices is now causing some prices of transportation services to back off. Companies that pay for shipping services are now benefiting from lower rates. Lower shipping prices are pushing down prices of goods that consumers pay for directly.

  8. jon says:

    Even if the inflation goes to zero, a substantial damage has already been done which can be reversible only by huge asset crash but then it’d create more destruction.

    what a mess CBs have created , on order to help rich and elite.

  9. Minutes says:

    Fed should hike 50 tomorrow. Send a message. But they won’t.

  10. HR01 says:


    Thanks for the update on EU inflation.

    Appears the ECB is in the same boat as the Fed. Inflation raging while the economy continues to show signs of tattering.

    Fed merely has to decide on whether to proceed with rate hikes. ECB has perhaps a bigger decision with regard to the TLTRO III loans. Total outstanding just over 1 trillion Euros. Vast majority have repayment date next month. Do they kick the can and extend the repayment schedule or hold firm?

  11. Mr. Random says:

    An excellent measure to follow is the Fed’s Sticky-Price CPI. It’s mostly services-based and has gone from 1.9% to 6.6% over the past year. As you said Wolf, services prices are hard to tame.

  12. Ist cousin Bubba says:

    Let s just raise the debt ceiling and everything will be just fine. HEE HEE
    Had enough yet?
    Got Passport?

  13. William Leake says:

    ECB started raising rates too slowly relative to general Euro inflation. It is only at 3.50%, way behind where it needs to be. Much more pain for Europeans.

  14. Petunia says:

    My observation on ECB inflation is that it is not only confined to services, it also extends to consumer products. Half the ECB countries produce most of the luxury brands coveted in the world. The price increases on these goods are almost monthly now and this inflation is being exported out to the rest of the world.

    A real world example:
    A designer brand 18K gold ring with diamonds is now cheaper than a Chanel handbag. You can’t make this up.

    • phleep says:

      I can’t believe people are throwing all that money at luxury brands. This seems like some sort of comic-book parody of any sensible reality. It is some sort of dopamine dope scene.

    • Harry Houndstooth says:

      Diamonds are just carbon crystals.

      As a human, I was so astonished that I could buy a laser pointer at Dollar Tree.

      Soon, there will be diamond jewelry at the Dollar and a Quarter Tree Store.

  15. David S says:

    Prolonged “higher” interest rates are going to destroy the budgets of the most heavily indebted countries, to include the US and the PIIGS and France now. Another opening for China to take advantage? Macron seems to think so….

    • jon says:

      I see it in different light.
      Free money makes every one ( govt or private sector ) irresponsible.
      With higher rates, these entities are forced to be more careful and diligent about where and how to spend money.

      We need higher rates.

    • Bobber says:

      It’s the runaway spending that destroys budgets, not interest rates.

  16. grimp says:

    The timing of the sudden bank issues and the FED meeting is quite the coincidence.

    • SocalJohn says:

      Yup. Hope the fed is not naive enough to fall for this. If they don’t hammer inflation we’ll be in really big trouble.

    • Rosarito Dave says:

      Yep…. it kind of worked the first time. If you recall, before the SVB and other bank runs, people were thinking there was a good chance the Fed was going to raise 50 BP…Inflation and Labor had spiked… then came the whispers to pull your money out of SVB and voila…. Fed compromised at 25….

  17. Herderp says:

    ” They include healthcare, education, housing….”
    I feel like prices for these things have been spiraling out of control for a decade, wonder why the core CPI didnt reflect it until recently. Did the weight of the other components really mask the rise in these sectors?

  18. Rico says:

    Some services are gouging. Because they can in a hot economy.

    I need a simple form filed with the recorder of deeds.

    One outfit said 350 plus 50 filing fee.

    Another outfit said 480 and 225 in fees

    Another outfit just asked what do I really want done, so I’m thinking he’s fishing to see how much he can charge.

  19. phleep says:

    I reckon there must be a vast overhang, an inventory of now-impaired value bonds across at least half the planet, from the ZIRP era, and the extension into 2020. This is marbled all through the financial system, but just showing in the worst-run banks so far. Some of these bonds are sovereign, some corporate. The sovereigns would seem to be burning a hole in the floor at most banks. (Same for their other impaired assets, in the form of loans to businesses at low rates of return, also with impaired credit now.) Bank runs? The huge cash overhang (maybe fortunately) has nowhere to run to. It can’t all be switched into gold bars. Crypto is a beyond-scary ”lifeboat,” not ready for prime time if ever. Market confidence is a hail-Mary of cash to a few AI monoliths (with their own vast unintended consequences to be revealed). I think this wasp-nest has been hit with a baseball bat, with agitation to come, but nowhere to go.

    As Michael Engel observed above, the classic fix-it tools may be used up, broken. More printing is a doom loop. Maybe something has to break, to simplify the picture (via collapse to lower complexity), to reset to something that can be repaired. I’m hoping I’m wrong about all this.

    • JimW says:

      A debt instrument with a twelve year duration issued at a two percent interest rate loses thirty six percent of its principal value with market rates at five percent two years later. Securities books and loan books held by banks have been seriously impaired regardless of whether the books are marked to market on bank balance sheets. What is holding up the house of cards is the knowledge that central banks can cover such losses in any amount of fiat if they are so inclined. In the US it is clear that bank runs will not be permitted; the EU will probably also do whatever it takes. And so, there is no bank solvency crisis unless Lagarde and the ECB fall asleep and allow solvency concerns to gain momentum.

  20. Gattopardo says:

    Fun fact:

    The top 6 countries all end in -ia…..and if Italy were natively spelled, Italia, it would be the top 8. The rest of the list is -ia free!

  21. harry hv says:

    Australia’s rate increase yesterday may have been down to personalities, the last hurrah of the RBA boss who is to be relieved of his duty to manage interest rates. He will be replaced by a govt-nominated committee. As always the first casualty of a banana republic is central bank independence.

    • The Real Tony says:

      I can tell you with complete confidence that the Bank of Canada will *never* follow the lead of Australia and raise the Bank of Canada rate.

  22. Phoenix_Ikki says:

    It will be interesting to see how this will unfold further around the world and in the US. You can bet tomorrow all the WS junkies will comb through every words out of Pow Pow’s mouth to find that silver lining and continue their rate cut hopium…

    This will be one for the history book for sure, trying to undo 20+ years of never ending drug binge..good luck to the FED…I have my doubts but would love it if they can prove me wrong and actually bring asset price back to somewhat close to reality…

  23. Seba says:

    Man, Latvia is just getting smoked. I know most here don’t give a rats ass but I wonder how it is for regular worker’s over there, I’d expect wages to rise with inflation but smaller less wealthy EU members might not be seeing wage increases anywhere close to those inflation figures.

    • The Real Tony says:

      Pakistan is even worse with inflation at 36 percent. The answer for that one is they all move to Canada where they grossly understate the rate of inflation.

  24. Rosarito Dave says:

    Latvia? Just be glad they’re not Argentina…..

    • Rosarito Dave says:

      My previous copy/paste didn’t post, but it said the target inflation for Argentina is about 91% thru 2023, moderating (LOL) to 68% in 2024!

  25. SnotFroth says:

    I don’t keep up much with Europe, but seeing Austria, Germany, and France with inflation generally higher than the PIIGS is surprising.

    Germany was supposed to be the paragon of prudence. I still remember Wolfgang Schauble glowering at Mario Draghi’s smug smile during some conference.

    • Jos Oskam says:

      The dam broke in Germany when Jens Weidmann stepped down prematurely as head of the Bundesbank. He was the last monetary realist and his departure should have been a ginormous red flag. He obviously saw things coming and wanted no part of it.

      Germany now seems to be run by a cabal of third-rate politicians far removed from any reality, given to magical thinking, and completely subservient to the USA. They are driving their economy straight into a brick wall for purely ideological reasons, far removed from any reality.

      It’s a horror show.

  26. longstreet says:

    October 28, 2021

    Christine Legarde says “ECB unlikely to raise rates in 2022”

    file this with Powell’s ““Right now … M2 … does not really have important implications. It is something we have to unlearn I guess.” he uttered in 2021.

    On the “wrong” scale, how wrong were these two?

  27. Swamp Creature says:

    PacWest is the next bank to go under. Stock is off 30%. in on day Depositors are fleeing like scaulded dogs. Off 31% in one 2 days. Many are sitting on the toilets this morning with their Iphones moving their funds out electronically.

    JPM’s purchase of 1st Republic ain’t gonna stop the runs on regional banks. Remember when JPM bought Bear Strearns in 2008! It didn’t work then and it’s not gonna work now. When you hear Yellen and Diamond say “The banking system is solid”, believe just the opposite.

    • Wolf Richter says:

      Bears Stearns wasn’t a bank. It was a broker-dealer. It didn’t take deposits and wasn’t funded by deposits and wasn’t FDIC insured. Its counterparties bailed on it, and it collapsed.

    • Swamp Creature says:

      Wasn’t Goldman Sucks in the same sorry position in the fall of 2008 as Lehman Brothers and Bear Sterns. Getting ready to go under. Hank Paulson renamed the Investment bank a bank on a 3 by 5 card and then they were then essentially bailed out.

      • Swamp Creature says:

        We did a foreclosure property for JPM about 2 years ago. After doing all the work (about 40+ hours worth) and handing in the case, they refused to pay us the fee for the work. We had to go to the Veterans Administration to force them to make the payment which they were forced to do.

        After that, we refused to take any work from this crooked bank.

  28. eg says:

    I can hear Mosler chuckling to himself as he mimics Lagarde muttering, “I keep raising rates and inflation keeps rising.”

    • The Real Tony says:

      No doubt because of all the damage from that decade of negative interest rates. Those countries all copied Japan and ended up like Japan a complete write-off.

  29. CD Buyer says:

    Regarding FDIC insurance, if someone opens a one year CD at 5.1% with a $100,000 starting balance, and the bank fails and is taken over by the FDIC 5 months later, will the depositor get just their $100,000 or $100,000 plus the interest that has accrued in the 5 months before the bank tanked?

  30. LouisDeLaSmart says:

    In data analysis one has to do a proper data quality assessment. Depending on the hypothesis/model of what healthy data is, one filters, averages and calculates in hopes of obtaining a parameter that to a certain extent relates to the supermarket prices on the shelves.
    …So said the grocery store price…
    I have asked a few friends in Europe and checked my grocery list, the prices are significantly higher then the reported food inflation (part of the CPI index, is reported at ¨20%). At this point of time I cannot give an exact number, but I can say that it is for sure more than 50% per year. For some products it is in the multiples of x100%. And it is accelerating again.
    The origin of the word crisis: Greek, κρίσις (krísis, “a separating, power of distinguishing, decision, choice, election, judgment, dispute”),
    A crisis is a judgment of our past doing.
    Let us see what the verdict is.

  31. The Real Tony says:

    The Bank of Canada’s strategy is to overestimate the annual inflation rate by about .75 to one full percentage point every six weeks and then state at each meeting the inflation rate came in way under estimates. The Bank of Canada was the first to pause rates and may be the first to cut rates even with the Bank of Canada rate deeply negative. In Canada its all about saving the housing market more to the point the housing market in the city of Brampton, Ontario.

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