At first, Jean-Claude Juncker was just jabbering about Greece. No, he couldn’t categorically exclude its exit from the Eurozone, but it wouldn’t happen “before the end of autumn.” These words might have thrown the markets into vertigo-inducing tailspins a year ago. But now, the President of the Eurogroup wasn’t ruffling any feathers; and markets went up. That’s how far the debt crisis has advanced. But suddenly the dark floodgates opened, and deep pessimism flooded the airwaves.
Europe – Germany
The German Economy Caves, And Eurozone Bailouts Take On New Dimensions
by Wolf Richter • • 1 Comment
Last year, German exports rode to a new record, jobs were being created in massive numbers, real wages rose, housing and real estate boomed, the federal budget was nearly balanced, and consumers felt good and spent money. There were moments in 2012 that made people dream of a repeat performance—despite the havoc that the Eurozone debt crisis has been wreaking. But now, the German export machinery is shifting down with an ear-piercing screech.
Escalation of the Extortion Racket: Now It’s ‘The Dissolution Of Europe’ Not Just the Eurozone
by Wolf Richter • • Comments Off on Escalation of the Extortion Racket: Now It’s ‘The Dissolution Of Europe’ Not Just the Eurozone
It has been an onslaught. Eurozone heads of state, top politicians, unelected kingpins, and bureaucratic honchos threatened everyone in sight with the demise of the euro, or promised to do “everything” or “whatever it takes” to save it even if it violated treaties or the foundation of democracy. In between the lines, the mammoth costs of continuing the bailouts or of breaking everything up oozed to the surface. But it got even worse.
No Functional Miracle Weapons To Fight The Debt Crisis
by Wolf Richter • • 2 Comments
It must be infuriating for Mario Draghi, the hapless President of the European Central Bank, to see how masterfully the Fed and the Bank of Japan control their respective credit markets, how they manipulate them for the benefit of the banks, and how they’re allowing their governments to fund huge deficits at near zero cost. Draghi just doesn’t seem to be able to wrap his arms around it.
Is Germany Preparing for a Spanish Default?
by Wolf Richter • • 10 Comments
Hope persists that Germany would not only bail out Spain and the rest of the Eurozone but would also tolerate the Fed-ization of the European Central Bank. Even Treasury Secretary Tim Geithner was hounding German Finance Minister Wolfgang Schäuble, who was on vacation. Yet, Deutsche Bank, Germany’s de-facto vice-ministry of finance whose CEO serves as éminence grise behind elected officials, well, that venerable institution at the core of Germany Inc. appears to be closing the book on Spain.
Beer, A Reflection Of The World Economy?
by Wolf Richter • • 7 Comments
As a kid in Germany, I engaged in underage beer drinking. I was too young to drive, so it didn’t bother anyone, except me the next day. It was when German beer consumption peaked at 151 liters per capita, the highest in the world. But then I went to America … and German beer consumption took a multi-decade dive. In the US and other Western countries, the beer industry is now morose as well, but it’s booming elsewhere.
War Of The Central Banks?
by Wolf Richter • • 2 Comments
The coordinated confidence-inspiring words from the Eurozone’s fearless leaders yesterday and today about doing whatever it would take to save the euro wasn’t about Greece anymore. Politicians have apparently given up on it. Instead, the fearless leaders were afraid of Spain. Its vital signs were deteriorating. It had threatened with default. So the ECB caved. And in doing so, it threw down the gauntlet.
Foreign Money in US Elections: And There Is A Winner
by Wolf Richter • • 2 Comments
Mitt Romney is venturing overseas to spend two days each in the UK, Israel, and Poland. It will hone his international credentials, give him an opportunity to look “presidential,” and allow him to establish or refine connections. He will also court Americans living abroad. Every vote counts. Campaign brawls will stay “at the water’s edge,” so no speeches or news conferences. But there will be fundraisers. And foreign corporations are donating to both sides.
The Extortion Racket Shifts to Spain
by Wolf Richter • • 2 Comments
After 21 summits to save the euro, followed by dog-and-pony shows to calm the markets, followed by confidence-inspiring pronouncements about insurmountable firewalls and pandemic structural reforms, the euro is in greater danger than ever before. Spanish Prime Minister walked away from the last summit in June with a victory smile. Now, Spain is on the brink. And word is out: default.
But Who The Heck Is Going To Do All The Bailing Out?
by Wolf Richter • • 10 Comments
Spain’s banks are getting bailed out with €100 billion. It won’t be enough, but it’ll buy time—a Eurozone mantra. Three of Spain’s seventeen heavily indebted regions asked for a bailout from the central government, and more are coming, but the central government can’t bail out anything because it’s broke. It needs a bailout for itself and for its regions. A bailout far larger than any of the prior bailouts. And then there’s Italy.