France’s finance minister sends tremors through European capitals with a defiant warning that his country would no longer try to meet deficit targets
Eurozone strategy is in tatters after economic recovery ground to a halt across the region and France demanded a radical shift in policy, warning that austerity overkill is driving Europe into a depression.
Growth slumped to zero in the second quarter, with Germany contracting by 0.2pc and France once again stuck at zero. Italy is already in a triple-dip recession.
Yields on 10-year German Bunds fell below 1pc for the first time in history, beneath levels seen during the most extreme episodes of deflation in the 19th century. French yields also touch record lows. Much of the eurozone is replicating the pattern seen in Japan as it slid into a deflation trap in the late 1990s.
It is unclear whether tumbling yields are primarily a warning signal of stagnation ahead or a bet by investors that the European Central Bank will soon be forced to launch quantitative easing, buying government bonds across the board.
Spain’s public debt has topped one trillion euros ($1.3 trillion) for the first time, the central bank announced Thursday, despite years of government-imposed austerity.
The nation’s accumulated public debt mushroomed to 1.007 trillion euros at the end of June from 996 billion euros a month earlier, the Bank of Spain said in a report. Continue reading
Data from Germany, Italy and Portugal put pressure on ECB to act
Portugal has crashed into deep deflation and Italy’s inflation rate has fallen to zero as the eurozone flirts with recession, automatically pushing these countries further towards a debt compound spiral.
The slide comes amid signs of a deepening slowdown in the eurozone core, with even Germany flirting with possible recession. Germany’s ZEW index of investor confidence plunged from 27.1 to 8.6 in July, the sharpest fall since June 2012, during the European sovereign debt crisis. “The European Central Bank has to act now,” said Andrew Roberts, credit chief at RBS. Continue reading
Today David Stockman warned King World News that investors need to brace themselves for historic and worldwide financial destruction. KWN takes Stockman’s warnings very seriously because he is the man former President Reagan called on in 1981, during that crisis, to become Director of the Office of Management and Budget and help save the United States from collapse. Below is what Stockman, author of the website contracorner, had to say in his powerful interview.
Eric King: “David, the man who is counsel to big money around the world, Michael Belkin, just spoke with KWN and issued a dire warning for the financial markets. I just wondered how you see things at this point with the Dow recently tumbling and everything that is happening across the globe? What should we expect?”
Stockman: “Well, the watchword at this point is stay out of harm’s way. We are headed into a perfect storm of policy failures. This is not simply a failure by the Fed, which has inflated this massive bubble and painted itself into a corner with no clue how to get out, but we are also seeing an absolute failure of American world dominance…
“Our foreign policy is collapsing everywhere and yet the Washington war party keeps wanting to do more of the same. This confrontation with Putin is utterly out of hand and unnecessary. Now we have a trade war going that is going to ricochet through an already fragile European economy. Continue reading
To get economy moving again, policymakers should go ahead with quantitative easing to boost liquidity and allow the euro to weaken
The euro zone’s “softly, softly” approach to the financial crisis is not working. The economy is sinking into deflation, dragged down by a zombie banking system and spiralling government debt. It is slipping back towards recession. A future break-up of the euro zone remains a potent threat.
Policymakers can ill afford to keep kicking the can down the road. The bailout earlier this month of Portuguese lender Banco Espirito Santo was a sharp reminder to investors the euro zone was not out of the woods by a long stretch. Continue reading
ROME — Italy slipped into recession for the third time since 2008 in the second quarter, underlining the chronic weakness of the eurozone’s third-largest economy and pressuring the government to complete promised reforms.
Figures on Wednesday from statistics agency ISTAT showed gross domestic product unexpectedly declined by 0.2% in April-June from the previous three months. A Reuters poll of economists had forecast growth of 0.2%.
The economy also shrank by 0.1% in January-March, meaning it has returned to recession, defined as two consecutive quarters of contraction.
Italian stocks fell after the data and the risk premium between Italy’s 10-year bonds and those of Germany widened. Continue reading
(CNSNews.com) – “Social Security is insolvent,” Boston University economics professor Laurence Kotlikoff told the House Subcommittee on Social Security at a hearing on Capitol Hill Tuesday. “And it’s not bankrupt in 30 years, or 20 years, or 10 years. It’s bankrupt today.”
“This is not my opinion. This is the only conclusion one can draw from Table IVB6 of the 2013 Social Security Trustee’s Report.”
“This table reports that Social Security has a $23 trillion fiscal gap measured over the infinite horizon,” noted Kotlikoff, who also served as a senior economist on President Ronald Reagan’s Council of Economic Advisers.
“Twenty-three trillion dollars is 32 percent of the present value, also measured over the infinite horizon, of Social Security’s future revenues. Hence, Social Security is 32 percent underfinanced, which means it is in significantly worse financial shape than Detroit’s two pension funds taken together.” Continue reading
Here’s a quick question for you. What do the following years have in common:
1853, 1906, 1929, 1969, 1999
Those were the peaks of the five massive, generational stock-market bubbles in U.S. history.
And, according to a new research report, we are back there again. Continue reading
As the gold and silver smash continues for a second day, billionaire Eric Sprott warned King World News that the Bank of England gold vaults are empty and there will be a price to pay for what Western central planners have done. The Canadian billionaire also warned about the banking system. Below is what Sprott, Chairman of Sprott Asset Management, had to say in Part I of a remarkable series of interviews that will be released today.
Sprott: “We have the Chinese coming in and buying an extra 1,500 tons (of gold). We will have a GLD metric that could be as much as 1,000 tons just this year, year over year. The Indians haven’t changed the laws yet but I think that will be forthcoming, and they can get back into normal buying mode…. Continue reading
The International Monetary Fund has issued a blistering attack on Europe’s authorities for allowing the eurozone to remain stuck in a low-growth trap, warning that they may have to print money with “full conviction” to head off deflation.
“Inflation has been too low for too long. A persistent failure to meet the inflation target could undermine central bank credibility,” said the IMF with remarkable bluntness in its annual health report on the currency bloc.
Germany’s cabinet has approved draft laws that effectively give the go-ahead to Europe’s plans for banking union – its main confidence-building response to the financial sector crisis.
With the laws, Germany is pressing ahead of EU requirements in protecting German taxpayers from having to foot the bill when a bank gets into trouble. Instead, in a process dubbed a “bail-in”, creditors and owners will have to take losses from 2015, a year before EU rules take effect. Continue reading
While just about every other central bank on the planet is giving everyone two thumbs up on the economy, the deputy chair of the Monetary Authority of Singapore (Lim Hng Kiang) said last night at a dinner that “an uneasy calm seems to have settled in markets” and that “we remain in uncharted waters.”
It was pretty amazing, really, to see such pointed language from a central banking official. Continue reading
(Reuters) – Argentina threatened to default on its debt on Wednesday when the government called it “impossible” to pay bond service due on June 30, citing a U.S. court decision earlier in the day that increased pressure on the economically ailing country.
Buenos Aires is locked in a 12-year legal fight with creditors who refused to participate in two restructurings that followed Argentina’s 2002 default on $100 billion in bonds.
The long impasse in the U.S. courts has kept the country from accessing international capital markets as its economy stagnates, inflation soars and central bank reserves fall. Continue reading
The appointment of an arch-federalist as the European Commission president risks creating a ‘dramatic’ backlash that will hasten Britain’s exit from the EU, one of the country’s most senior diplomats has warned.
A leaked document said Ivan Rogers, the UK’s permanent representative to the EU, believes the ‘die is cast’ in favour of Jean-Claude Juncker, the former prime minister of Luxembourg.
His proposed elevation to Europe’s top job has been fiercely opposed by David Cameron, who says Britain rejects the founding EU principle of ‘ever closer union’, which Mr Juncker supports. Continue reading
Have you heard the one about the “economic recovery” in the United States? It’s quite funny, but it is not actually true. Every day, the establishment media points to the fact that global stock markets have soared to unprecedented heights as evidence that the economy is improving. But just because a bunch of wealthy people have gotten temporarily even richer on paper does not mean that the real economy is in good shape. In fact, as you will see below, things just continue to get even tougher for the poor and the middle class. Retail stores are closing at the fastest pace since the fall of Lehman Brothers, the rate of homeownership in this country is the lowest that it has been in 19 years, one out of every five families do not have a single member that is employed, and one out of every five children is living in poverty. We are working harder, earning less and going into more debt. With each passing day, the middle class gets a little bit smaller and the ranks of the poor get a little bit larger. But at least the stock market is doing great, eh?
If the U.S. economy really was doing well, government dependence would not be at epidemic levels.