Posts Tagged ‘Spain’
The economic implosion of Europe is accelerating. Even while the mainstream media continues to proclaim that the financial crisis in Europe has been “averted”, the economic statistics that are coming out of Europe just continue to get worse. Manufacturing activity in Europe has been contracting month after month, the unemployment rate in the eurozone has hit yet another brand new record high, and the official unemployment rates in both Greece and Spain are now much higher than the peak unemployment rate in the United States during the Great Depression of the 1930s. The economic situation in Europe is far worse than it was a year ago, and it is going to continue to get worse as austerity continues to take a huge toll on the economies of the eurozone. It would be hard to understate how bad things have gotten – particularly in southern Europe. The truth is that most of southern Europe is experiencing a full-blown economic depression right now. Sadly, most Americans are paying very little attention to what is going on across the Atlantic. But they should be watching, because this is what happens when nations accumulate too much debt. The United States has the biggest debt burden of all, and eventually what is happening over in Spain, France, Italy, Portugal and Greece is going to happen over here as well.
The following are 20 facts about the collapse of Europe that everyone should know…
#1 10 Months: Manufacturing activity in both France and Germany has contracted for 10 months in a row.
#2 11.8 Percent: The unemployment rate in the eurozone has now risen to 11.8 percent – a brand new all-time high.
#3 17 Months: In November, Italy experienced the sharpest decline in retail sales that it had experienced in 17 months.
#4 20 Months: Manufacturing activity in Spain has contracted for 20 months in a row.
#5 20 Percent: It is estimated that bad loans now make up approximately 20 percent of all domestic loans in the Greek banking system at this point.
#6 22 Percent: A whopping 22 percent of the entire population of Ireland lives in jobless households.
#7 26 Percent: The unemployment rate in Greece is now 26 percent. A year ago it was only 18.9 percent.
#8 26.6 Percent: The unemployment rate in Spain has risen to an astounding 26.6 percent.
#9 27.0 Percent: The unemployment rate for workers under the age of 25 in Cyprus. Back in 2008, this number was well below 10 percent.
#10 28 Percent: Sales of French-made vehicles in November were down 28 percent compared to a year earlier.
#11 36 Percent: Today, the poverty rate in Greece is 36 percent. Back in 2009 it was only about 20 percent.
#12 37.1 Percent: The unemployment rate for workers under the age of 25 in Italy – a brand new all-time high.
#13 44 Percent: An astounding 44 percent of the entire population of Bulgaria is facing “severe material deprivation”.
#14 56.5 Percent: The unemployment rate for workers under the age of 25 in Spain – a brand new all-time high.
#15 57.6 Percent: The unemployment rate for workers under the age of 25 in Greece – a brand new all-time high.
#16 60 Percent: Citigroup is projecting that there is a 60 percent probability that Greece will leave the eurozone within the next 12 to 18 months.
#17 70 Percent: It has been reported that some homes in Spain are being sold at a 70% discount from where they were at during the peak of the housing bubble back in 2006. At this point there are approximately 2 million unsold homes in Spain.
#18 200 Percent: The debt to GDP ratio in Greece is rapidly approaching 200 percent.
#19 1997: According to the Committee of French Automobile Producers, 2012 was the worst year for the French automobile industry since 1997.
#20 2 Million: Back in 2005, the French auto industry produced about 3.5 million vehicles. In 2012, that number dropped to about 2 million vehicles.
One thing that these shocking numbers cannot convey is the tremendous amount of pain that many average Europeans are living through on a daily basis at this point. To get a peek into what life is like in Greece these days, check out this short excerpt from a recent Bloomberg article…
Anastasia Karagaitanaki, 57, is a former model and cafe owner in Thessaloniki, Greece. After losing her business to the financial crisis, she now sleeps on a daybed next to the refrigerator in her mother’s kitchen and depends on charity for food and insulin for her diabetes.
“I feel like my life has slipped through my hands,” said Karagaitanaki, whose brother also shares the one-bedroom apartment. “I feel like I’m dead.”
For thousands of Greeks like Karagaitanaki, the fabric of middle-class life is unraveling. Teachers, salaries slashed by a third, are stealing electricity. Families in once-stable neighborhoods are afraid to leave their homes because of rising street crime.
All over Europe, people that have lost all hope are actually setting themselves on fire in a desperate attempt to draw attention. Millions of formerly middle class Europeans have lost everything and are becoming increasingly desperate. Suicide and crime are skyrocketing all over southern Europe and massive street riots are erupting on a regular basis.
Unfortunately, this is just the beginning. Things are going to get even worse for Europe.
Meanwhile, those of us living in the United States smugly look down our noses at Europe because we are still living in a false bubble of debt-fueled prosperity.
But eventually we will feel the sting of austerity as well. The recent fiscal cliff deal was an indication of that. Taxes are going up and government spending is at least going to slow down. It won’t be too long before the effects of that are felt in the economy.
And of course the reality of the situation is that the U.S. economy really did not perform very well at all during 2012 when you take a look at the numbers. The cold, hard truth is that the U.S. economy has been declining for a very long time, and there are a whole bunch of reasons to expect that our decline will accelerate even further in 2013.
So if you are an American, don’t laugh at what is happening over in Europe at the moment. We are headed down the exact same path that they have gone, and we are going to experience the same kind of suffering that they are going through right now.
Use these last few “bubble months” to prepare for what is ahead. At some point this “hope bubble” will disappear and then the time for preparation will be over.
As our futures bleed this morning on the hangover from yesterday’s rumor dujour on the “fiscal cliff” buried below the fold and therefore invisible to Americanus Stupidus is the news that both Bankia and Valencia, along with a handful of other Spanish banking names, are collapsing.
Bankia was formed from a merger of provincial savings banks, drawing in over a quarter of a million small investors with extremely aggressive marketing. Unfortunately it appears that they were also hiding losses and it was recently revealed that the firm had negative equity (that is, its assets are worth less than its deposits.)
Last May, if you recall, the firm was “nationalized” but the patina of normalcy was maintained for a while, with some fools continuing to believe they would somehow maintain their investment. That now looks to be a farce as the recapitalization of the bank will effectively destroy the value of the firm’s stock and leave investors with what amounts to nothing.
This leads one to wonder if the original listing on the Madrid exchange was basically a sham operation; it’s not exactly as if the firm made all these loans in the 18 months since it was listed in July of 2011!
But heh, remember that we’re all being told that the global economy will be ok, we’ve just got to get through this fiscal cliff problem and then Europe and the United States will return to strong growth!
The lack of enthusiasm for the latest effort to centralize all banking and monitory regulation within the European Central Bank suggests that the surreal struggle for continental unanimity still resides in the minds of banksters. Elites still seek to perfect the class distinguish of century old traditions, into a modern version of feudal serfdom. Globalism is the brainchild of the cabal of international banking. As long as a financial monopoly dominates political institutions, the end result will be more consolidation of the rule of the House of Rothschild.
The European Commission recently announces and lays ground for banking union.
“A new proposal would see the European Central Bank (ECB) gaining new powers to monitor the performance of the 6 000 or so banks in the eurozone. The arrangement would be known as the single supervisory mechanism.
The ECB would take over tasks such as authorizing banks and other credit institutions, ensuring they have enough (liquid) capital to continue operating even when sustaining losses and monitoring the activities of financial conglomerates.
If a bank breaches – or is at risk of breaching – capital requirements, the ECB would be able to ask the bank to take corrective action. National supervisors would meanwhile continue to carry out day-to-day checks.
A single rulebook on capital requirements, standardized deposit protection schemes and new recovery and resolution provisions – all proposed earlier in the year – would complete the ‘banking union’.”
A champion for the proposal, Michel Barnier: European banking union is “necessary and possible”, explains the scheme further.
“It is also understood the ECB will have the power to wind up banks; remove bank licenses; and force recapitalization programs when it think it’s necessary, according to the documents.
The ECB will also be empowered to “enter into administrative arrangements” with regulators outside the eurozone – or act and negotiate on behalf of all members in talks on global financial regulation.”
The City of London has never been a keen supporter of European governance. Britain opposes ECB as head of Banking Union illustrates push back.
“Britain is pushing for changes to a proposed euro zone banking union to dilute the power of the European Central Bank, EU officials said, potentially hampering efforts to build the infrastructure urgently needed to underpin the euro.
Britain intends to propose a system that would give countries outside the banking union the possibility of blocking those within the project from clubbing together to shape EU-wide regulations, said EU officials, speaking on condition of anonymity.
“The concern is that the Bank of England can find itself outvoted by the ECB on aspects of rule making,” said one official. Britain will not join the banking union.”
Another report in, Britain pushing to dilute powers of ECB in banking union, reveals the concerns about a diminished influence of the British financial houses.
“Britain’s finance minister, George Osborne, fears the ECB will use its authority to impose EU-wide regulation that would favor countries with the euro and put London’s financial centre, using sterling, at a disadvantage.
“It seems unlikely that the ECB would ride roughshod over the wishes of the Bank of England, but that is what the British Treasury is worried about,” said the first official. “They want safeguards to make sure that doesn’t happen.”
Britain and all other members of the European Union must give the green light to the banking union before it can go ahead, an approval that could be delayed or withheld if London’s concerns are not addressed.”
Empowering the European Central Bank regulatory authority over every country as part of the broad EU coalition requires surrender of even more national sovereignty.
Since the initial pronouncement for a single supervisory mechanism, acceptance for a new European Central Bank Headquarters in Frankfurt Germany has shown caution.
In the article, Germany’s Merkel, Sweden’s Reinfeldt:Banking Union Must Be Done Right, even Angela Merkel told reporters, “Quality is more important than speed“.
“Mr. Reinfeldt said Sweden wasn’t fundamentally opposed to banking union, but added: “We don’t think suggestions on the table now are ready. It would be better to get it right than rush it through.”
He also said that although Sweden isn’t in the euro zone, Sweden must have influence over decisions taken that could have an impact on his country’s banks. “If we take part, we want to have influence. And we do not find in the current proposal that we have that,” Mr. Reinfeldt said.”
Germany having lost two military world wars, wants to win the financial conflict for dominance of Europe. However, is the relative prosperity of the German economy healthy enough to carry the burden of the bankrupt sister nations on the continent?
While the prospects of a single supervisory mechanism are profoundly disturbing, the forecast of globalized integration into a one-world economy is even worse. At stake is a total elimination of the national identity and home rule.
Essentially the will of the “people” demonstrated by numerous referendums, have sought to limit the centralization overreach of the European Commission. Now that the power grab of the European Central Bank is in motion, the communal interests of Europeans needs to reflect disgust for the administrative technocrats that seek to impose their will across national borders.
It seems the lessons of centuries are so soon forgotten, when the illusory and outlandish nightmare, that a centralized banking cartel is the best form for political government. Absent from the fiscal equation is that the Federal Reserve has been bailing out the failed ECB. MarketWatch reports in Fed bails out Europe while ECB dithers.
“On one level, it’s almost funny to call offering dollars at a cheaper rate to foreign banks “coordinated” action.
It’s only coordinated in the sense that the Federal Reserve is printing the dollars and the European Central Bank and other central banks put the greenbacks in the virtual vaults of mangled commercial banks that are drowning in European debt. See story on Fed action.”
The central banks are the problem, not the solution; and the only way to regain economic prosperity and political independence is to repudiate the illicit debt extortion.
So Spain got cut to BBB- today by S&P, with a negative outlook.
The two-notch slash job took the nation’s debt rating to the edge of “junk” status. In truth the entire EU zone except, perhaps, Germany should be rated “F” — for “f___ed” — but we’ll leave that aside for now.
The problem there is the same as the problem here — there is no political will to do what has to be done,which is to cut off the deficit spending.
Right here, right now, all at once.
Yes, I know that’s difficult politically. That doesn’t change the necessity of doing it.
There is one simple fact about holes, fiscal or otherwise — you must stop digging when you’re in one.
There is a second reality about geometric series, of which any compounded growth rate is – there is never a better time than now to stop adding to them; indeed, the amount of pain you must accept goes up inexorably each and every day until you cease and desist.
There is no way around this. It is a function of arithmetic, not politics. It is true there in Spain, and it is true here in the United States.
Today’s cut was just another notch in the pressure vessel that is already well beyond the point at which it should have burst. We cannot continue to play this game — not there and not here.
Yet there is no evidence — anywhere — that politicians will take the necessary steps and stop deficit spending.
And stop it they must.
I do not know exactly how far we are from the markets giving up on the clown-car brigade and beginning the writedown of these debts and forward profit expectations on their own. Taken as a vote of “no confidence” as opposed to one of recognition of reality, there is no floor until confidence is regained, and the more desperate measures that central banks and governments take in response, the worse the confidence deficit will become.
Geithner is playing his wormy self over in Tokyo at the present, but he, like the rest of these clowns, are well beyond their “use by” date and are simply stinking up the kitchen.
We need an honest cook that will stop trying to serve us broiled rat while telling us it’s venison.
U.S. stock-index futures dropped as Germany and France differed on when to introduce a banking union for the euro-area and a report showed optimism among Chinese manufacturers fell, adding to concern of an economic slowdown.
Let me guess — beyond the problem that transparent balance sheets would cause for certain financial institutions in Germany (and elsewhere) riots are good for Chinese confidence, yes?
I always find it amusing when people talk about “resolving” a debt crisis while continuing to run leverage ratios at ridiculous levels and using central banks to try to play “inflate it away” (which, incidentally, cannot work.)
Speaking of which, I wish to dispell one of the common lies told about the paths available when one is overwhelmed with debt. It is often said that Europe (and the US) can “inflate away” debt with central-bank policy.
This is a lie.
It is mathematically impossible for that to work because all money is debt in a fiat currency system. Therefore, attempting to inflate away the debt is in fact counter-productive and doomed to failure, as the credit in the system, growing faster than output does, must always destroy more purchasing power than it diminishes debt in current-unit amounts.
The reason is that economics has slippage, and thus behaves much like a system subject to the laws of thermodynamics. That is, all economic actions have loss in some form or fashion; they are less than 100% efficient. To no small degree this is because government is always involved somewhere in the economy, but that is not the only reason — private parties always have some waste in their economic processes as well, as we all interact with the material world and that interaction is always less than 100% efficient.
This, in the end, leads one to the inexorable conclusion that there are in fact only two ways out of having too much debt — one can either cut the spending and raise the taxes required to stop increasing deficits at a government level, and stop the unsustainable spending in the private economy, or bankruptcy is inevitable.
The United States has a different set of problems that Europe to a large degree mostly because our deficits come from two places — defense and health care. As I have previously expounded upon the health care spending issues are not about Medicare and Medicaid per-se; they are instead about the health system itself and the unjust and unsustainable monopoly-style practices that health providers of all sorts have managed to carve out in the law over the previous 50 years. Likewise, our defense posture and spending, which is also grossly unsustainable, is nearly all about our energy policy — or rather the lack of one.
Neither of these issues can be resolved by simply “fixing the budget”; one must remove the special protections in the health care system and allow competition to come back into the fore, which will inevitably result in a short-term contraction in GDP (and a large one at that) as realignment occurs. Likewise, we must also solve our energy dependence, which will in turn make our military protectionism unnecessary and allow for contraction of our defense spending.
But neither of these are likely on a voluntary basis; both are political hot potatoes and none of the candidates for high office are even talking about these facts.
You cannot solve a problem until you admit you have it.
18 Indications That Europe Has Become An Economic Black Hole Which Is Going To Suck The Life Out Of The Global Economy
Summer vacation is over and things are about to get very interesting in Europe. Most Americans don’t realize this, but much of Europe shuts down for the entire month of August. I wish we had something similar in the United States. But now millions of Europeans are returning from their extended family vacations and the fun is about to begin. During August economic conditions continued to degenerate in Europe, but I figured that it wouldn’t be until after August that the European debt crisis would take center stage once again. And as I wrote about last week, if there is going to be a financial panic, it typically happens in the fall. The stock market has seen quite a nice rally over the summer, and many investors are nervous that we could see a significant “correction” very soon. The month of September has been the absolute worst month for stock performance over the past 50 years, and it has also been the absolute worst month for stock performance over the past 100 years as well. Of course that does not guarantee that anything is going to happen this year. But things in Europe continue to get worse. Unemployment rates are spiking, manufacturing activity is slowing down, housing prices are crashing and major financial institutions are failing. What is happening in Europe right now appears to be an even worse version of what happened to the United States back in 2008.
But most Americans aren’t too concerned about what is happening in Europe.
In fact, most Americans don’t believe that a European financial collapse would be much of a problem for us.
Well, just remember what happened back in 2008. When the U.S. financial system started coming apart at the seams it sparked a devastating worldwide recession which was felt in every corner of the globe.
If the European financial system implodes, the consequences could be even worse.
Europe has a larger population than the United States does.
Europe has a larger economy than the United States does.
Europe has a much, much larger banking system than the United States does.
If Europe experiences a financial collapse, the entire globe will feel the pain.
And considering how weak the U.S. economy already is, it would not take much to push us over the edge.
What is going on in Europe right now is a very, very big deal and people need to pay attention.
The following are 18 indications that Europe has become an economic black hole which is going to suck the life out of the global economy….
#1 The unemployment rate in France is up to 10 percent, and the French media is buzzing about the fact that the number of unemployed French workers has now hit the 3 million mark.
#2 The French government has just announced the nationalization of its second largest mortgage lender. Additional bailouts are likely on the way.
#3 French automaker PSA Peugeot Citroen has announced that it will be cutting more than 10,000 jobs. But of course major layoff announcements like this are coming out of Europe almost every day now.
#4 Home prices in France are falling rapidly and the recent election of a socialist president has created a bit of a panic in the French housing market….
British people with homes in France were today warned that the property market is in ‘free fall’.
A combination of factors including the election of a tax-and-spend Socialist government means that prices are tumbling.
It means an end to the boom years, when thousands of Britons poured money into rental or retirement investments across the Channel.
#5 A slow-motion bank run is happening in Spain. The amount of money being pulled out of the Spanish banking system is absolutely unprecedented. The following is from a recent Zero Hedge article….
The central bank of Spain just released the net capital outflow numbers and they are disastrous. During the month of June alone $70.90 billion left the Spanish banks and in July it was worse at $92.88 billion which is 4.7% of total bank deposits in Spain. For the first seven months of the year the outflow adds up to $368.80 billion or 17.7% of the total bank deposits of Spain and the trajectory of the outflow is increasing dramatically. Reality is reality and Spain is experiencing a full-fledged run on its banks whether anyone in Europe wants to admit it or not.
If this pace keeps up, more than 600 billion dollars will be pulled out of Spanish banks by the end of the year.
Keep in mind that the GDP of Spain for all of 2011 was just 1.49 trillion dollars.
So by the end of this year we could see the equivalent of more than 40 percent of Spanish GDP pulled out of Spanish banks and sent out of the country.
In case you were wondering, yes, that is a nightmare scenario.
#7 The yield on 10 year Spanish bonds is up to 6.85 percent. This is an unsustainable level, and if rates don’t come down on Spanish debt soon it is inevitable that Spain will end up just like Greece.
#8 On Monday it was announced that Spanish banking giant Bankia will be getting an emergency “cash injection”of between 4 and 5 billion euros. Apparently “cash injection” sounds better to the politicians than “a bailout” does.
#9 The housing crash in Spain just continues to get worse. It is being reported that some homes in Spain are being sold at a 70% discount from where they were at the peak of the market back in 2006. At this point there are approximately 2 million unsold homes in Spain.
#10 There are persistent rumors that the government of Spain will soon be forced to officially ask for a bailout from the rest of Europe. But who is going to bail them out? Most of the other governments of the eurozone are on the verge of bankruptcy themselves.
#11 Manufacturing activity in Europe has contracted for 13 months in a row. The following is from a recentReuters report….
The downturn that began in the smaller periphery members of the 17-nation bloc is now sweeping through Germany and France and the situation remained dire in the region’s third and fourth biggest economies of Italy and Spain.
“Larger nations like France and Germany remain in reverse gear… the (manufacturing) sector is on course to act as a drag on gross domestic product in the third quarter,” said Rob Dobson, senior economist at data collator Markit.
Markit’s final Purchasing Managers’ Index (PMI) for the manufacturing sector fell from an earlier flash reading of 45.3 to 45.1, above July’s three-year low of 44.0, but notching its 13th month below the 50 mark separating growth from contraction.
#12 Chinese exports to the EU declined by 16.2 percent in July. U.S. exports to Europe have been steadily falling as well.
#13 Slovenia and Cyprus are two other eurozone members that are in desperate need of bailout money. The dominoes just keep falling and nobody seems to be able to come up with a plan to “fix” Europe.
#14 Even the “strong” economies in Europe are being dragged down now. For example, unemployment in Germany has risen for five months in a row.
#15 According to one recent poll, only about one-fourth of all Germans want Greece to remain a part of the eurozone. The odds of a breakup of the euro seem to rise with each passing day.
#16 It is now estimated that bad loans make up approximately 20 percent of all domestic loans in the Greek banking system at this point.
#17 The suicide rate in Greece is more than 30 percent higher than it was last year. People are becoming very desperate in Greece and there is no end in sight to the economic depression that they are going through.
#18 Large U.S. companies have been rapidly getting prepared for a Greek exit from the eurozone. The following is from a recent New York Times article….
Even as Greece desperately tries to avoid defaulting on its debt, American companies are preparing for what was once unthinkable: that Greece could soon be forced to leave the euro zone.
Bank of America Merrill Lynch has looked into filling trucks with cash and sending them over the Greek border so clients can continue to pay local employees and suppliers in the event money is unavailable. Ford has configured its computer systems so they will be able to immediately handle a new Greek currency.
Every time European leaders get together they declare that they have “a plan” that will solve the problems that Europe is experiencing, but as we have seen things in Europe just continue to get worse with no end in sight.
A key date is coming up in the middle of this month. On September 12th, Germany’s Constitutional Court will determine the fate of the recent fiscal pact and the ESM. According to UniCredit global chief economist Erik Nielsen, if the court rules against the fiscal pact and the ESM the fallout will be catastrophic….
“If they were to surprise us by striking down Germany’s participation, I would think it’d be an utter bloodbath in markets”
But that is not the only thing that could set off a full-blown panic in the financial markets.
The truth is that Europe is teetering on the edge.
One wrong move and it is going to be 1929 all over again.
As I have maintained all along, the next wave of the economic collapse is rapidly approaching, and this time the epicenter for the crisis is going to be in Europe.
But that does not mean that things are going to be easier for the United States than last time. We have never even come close to recovering from the last recession. Most Americans families are just barely getting by. In fact, 77 percent of them are living paycheck to paycheck at least part of the time.
Right now there are millions of Americans that have lost their jobs and their homes in recent years and that feelforsaken by society.
After this next wave hits us there will be tens of millions of Americans feeling the pain of economic desperation.
The last wave of the economic collapse hurt us.
This next wave is going to absolutely devastate us.
Watch what is happening in Europe very carefully. What Greece, Spain, Italy and France are experiencing right now is going to hit us soon enough.