In Greece’s chaotic wake bobs the listing Republic of Cyprus, soon to be the fifth Eurozone country, out of seventeen, to get a bailout. By June 30. Only last year’s €2.5 billion loan from Russia has kept it afloat. It’s economy is shrinking, unemployment is at a record, and real estate is collapsing after a phenomenal bubble and a nationwide title-deed scandal that has taken down the banks. But Cyprus has something—and it’s huge—that no other troubled Eurozone country has.
Greece’s Scams, Extortion, and “Suicidal” Possibility
by Wolf Richter • • Comments Off on Greece’s Scams, Extortion, and “Suicidal” Possibility
On June 17, when Greeks try again to choose a government, they’ll decide their country’s fate—or not. One thing is for sure, whichever parties are able to form a coalition government, they will push for more bailout billions, but this time, forget the conditions, the structural reforms, the austerity. Just give us the money. And however much we want. They’d watched Spanish Prime Minister Mariano Rajoy proclaim victory.
China: A Mixed Bag Turns Very Ugly
by Wolf Richter • • 2 Comments
2010 was a magical year in China. Among the world records: 18 million new vehicles sold. Due to unprecedented stimulus, sales had skyrocketed 33% that year and 54% in 2009—mind-boggling. It catapulted China to the number one new-vehicle market in the world, far ahead of the US which had never sold that many units in a single year. And it gave rise to a surge in production capacity. But now, the China auto bubble is emitting a sharp hiss.
“The Euro Is Like a Knife in the Hands of a Child”
by Wolf Richter • • Comments Off on “The Euro Is Like a Knife in the Hands of a Child”
While France is preoccupied with the legislative elections next weekend, Germany and Austria plunge into public soul searching about the euro, its meaning, its relevancy, the sheer and endlessly growing expense of maintaining it. To which are now added the $125 billion for bailing out Spain, the first in a series. Then there’s Italy. Like so many things that appear useful and sensible, the euro has become dangerous.
Bailout Rebellion Reawakens In Germany
by Wolf Richter • • Comments Off on Bailout Rebellion Reawakens In Germany
Josef Ackermann, Deutsche Bank’s CEO until a couple of weeks ago, who knows a thing or two about skeletons hidden in the bank’s vast closets, says that he is “grateful the US is pushing Europe to act faster.” Just like his US counterparts on Wall Street in 2008, he wants massive bailouts of the banks. He has “no doubt” that the German people would rescue the Eurozone, he says. But the German people aren’t so sure about that.
The Big Lie
by Wolf Richter • • Comments Off on The Big Lie
Since the lousy jobs report, there has been a veritable orgy of Fed Speak with juicy morsels and contradictions, interspersed with leaks and rumors, that climaxed today with Chairman Ben Bernanke’s words of wisdom. It whipped markets into a frenzy, drove the Dow up 500 points, knocked yields to historic lows, and caused gold, the safe-haven, to bounce up and down like a rubber ball. And everyone was eagerly waiting for the big lie.
A Central Banker Utters The Truth
by Wolf Richter • • Comments Off on A Central Banker Utters The Truth
On July 1, Cyprus, a tiny country on a divided island, will rotate into the Presidency of the Council of the mighty EU—one of those bitter European ironies because Cyprus will have to be bailed out, according to its Central Bank governor. Reality is now even staining the Teflon economy of Germany with a daily litany of suddenly awful data points. But a central banker pointed at an uplifting story of austerity and growth at the edge of Eurozone mayhem.
Capital Destruction in Natural Gas
by Wolf Richter • • Comments Off on Capital Destruction in Natural Gas
Dirt cheap natural gas has done wonders for America. Bene-ficiaries are scattered across the country: households with lower heating bills, industrial users, utilities, companies dreaming of building LNG export terminals to benefit from prices that are several times higher in the international markets. Yet it’s tearing up the very industry that is producing it, and capital destruction has reached epic proportions. But the bloody end is near.
Everything is Getting Gummed up in Greece
by Wolf Richter • • 8 Comments
Tourism, Greece’s second largest industry after the shipping industry, and already in a downdraft, is taking another hit as tour-bus drivers will go on strike; wage negotiations have deadlocked. Owners demand that drivers take a 50% cut in pay and benefits on top of the 20% cut they’ve already suffered! And Greece is the model for Spain and Italy.
Squeezing The Fed From Both Sides
by Wolf Richter • • Comments Off on Squeezing The Fed From Both Sides
The ugly jobs report gave Mitt Romney what he’d been waiting for: a huge boost. He’s out making hay, calling it “devastating news for American workers and families.” An army of Republican talking heads swarmed over the land and pummeled President Obama with the jobs report. And just as Republicans see victory edge closer, shrill voices are calling for the Fed to launch the next round of quantitative easing. Collision alert!