Christine Lagarde, managing director of the IMF, told the South African Business Day that the Eurozone might avoid a recession in 2012, an inexplicable bout of optimism in light of some ugly trends. Germany, economic superstar with unemployment at a 20-year low and exports at an all-time high, produces 34% of the Eurozone’s GDP—and it has smacked into a wall.
Europe
“German Success Recipe” or Blip?
by Wolf Richter • • Comments Off on “German Success Recipe” or Blip?
During the financial crisis, Germany’s export orders fell off a cliff. GDP plunged 2.1% in the 4th quarter of 2008 and a horrid 3.8% in the 1st quarter of 2009. The worst quarters in the history of the Federal Republic. But the recovery was enormous. So it’s natural that the German media would gloat over the “German success recipe.” But now the first shadows have appeared.
Greece’s Extortion Racket Maxed Out
by Wolf Richter • • Comments Off on Greece’s Extortion Racket Maxed Out
Just how bad is the real economy in Greece after five years of recession, countless strikes, and 17.7% unemployment? Registrations of vehicles plunged 30% in 2011, after having plunged 37% in 2010. They’re now at the lowest level in over 20 years. Troika inspectors are on their way … to demand yet more cuts. And the Prime Minister puts the nuclear option on the table.
Missing: 13.3 Billion Deutschmarks
by Wolf Richter • • Comments Off on Missing: 13.3 Billion Deutschmarks
In late 2001, German banks sold Euro Starter Kits—sealed pouches with €10.23 in coins. One of many steps in the arduous process of weaning Germans from their D-Mark. I bought one and still have it. It’s in the back of a drawer, next to a D-Mark coin. And that coin is part of a vast phenomenon: 13.3 billion in missing Deutschmarks. But now people see a reason to hang on to them.
French CEO About Ratings Agencies: ‘We Have To Shoot All These Guys’
by Wolf Richter • • Comments Off on French CEO About Ratings Agencies: ‘We Have To Shoot All These Guys’
“We’re experiencing the beginning of the repercussions of the financial crisis,” said Michel-Edouard Leclerc, CEO of the second largest retailer in France. He has never seen so much “rational behavior among consumers” and so much “fear of getting screwed.” Until now, the crisis has touched mostly the financial world, but in 2012, it will hit the real economy. “It’s always the people who end up paying,” he said.
CEO of Dexia: ‘Not A Bank But A Hedge Fund’
by Wolf Richter • • Comments Off on CEO of Dexia: ‘Not A Bank But A Hedge Fund’
The Previously Unthinkable Becomes A Planned Event
by Wolf Richter • • Comments Off on The Previously Unthinkable Becomes A Planned Event
Governments and companies around the world have been preparing for a collapse of the Eurozone—simple prudence requires them to do that. Theoretical exercises for a hypothetical scenario, they call it. But recently, these theoretical exercises have taken on practical overtones. And even the public is now encouraged to prepare for the demise of the euro.
Political Realities Threaten To Split The Eurozone
by Wolf Richter • • Comments Off on Political Realities Threaten To Split The Eurozone
Sarkozy will be the only French president since World War II with two recessions under his belt, if current forecasts are correct. Recessions are rare in France: between the war and the financial crisis, there were two. Against this backdrop, Sarkozy faces a tough reelection campaign. And front runner François Hollande has vowed to oppose the German dictate on how to save the Eurozone. So it might all unravel.
Merde! Chinese Wines Did What to French Wines?
by Wolf Richter • • Comments Off on Merde! Chinese Wines Did What to French Wines?
In France, the litany of job reductions continues. Today, it was Air France. It followed automaker PSA Peugeot Citroën, French banks, nuclear-power conglomerate Areva, drug maker Sanofi, newspapers, ferry operator Seafrance, etc. It’s tough out there. And now, France’s heavily subsidized signature industry—wines—got slapped in the face. By China.
Germany’s Last-Ditch Compromise, At A Price
by Wolf Richter • • Comments Off on Germany’s Last-Ditch Compromise, At A Price
“I’m very happy with the result,” Merkel told the cameras. But the agreement may be illegal under EU law and may devastate weaker economies. It elevated Germany to a leadership role that other countries perceive as domineering. By isolating the UK, it cut a deep gash into the EU. And it can’t be put into a treaty. But it did offer a compromise of sorts.