Here Comes The Double Dip Pt. 4 (merged) Archived

[Daniel_Plainview]

Debt crisis threatens to break up Europe

Tensions within the eurozone over how to resolve the debt crisis are turning countries against each other and threatening to rip Europe apart, Italian Prime Minister Mario Monti has warned.

Resentment in Italy is growing against Germany, the European Union and even German chancellor Angela Merkel herself, he said, adding that “the pressures already bear the traits of a psychological break-up of Europe”.

Mr Monti told German news magazine Der Spiegel that he was “concerned” about the deepening divisions and said governments “must work hard to contain it”. His words were released as Greece pledged further economic reforms to avert bankruptcy at a meeting with the bail-out “troika” of the European Commission, European Central Bank and International Monetary Fund.

After Sunday’s meeting, the troika said: “There was an overall agreement on the need to strengthen policy efforts.” Last week, Greek prime minister Antonis Samaras secured cross-party support for a further €11.5bn (£9.11bn) of cuts in 2013 and 2014 to keep the €130bn of international rescue funds flowing. The details must be agreed by early September if Greece is to receive its next bail-out tranche.

The divisions within Europe were laid out in the weekend’s German press, where German regional finance minister, Markus Soeder, said that aid to Greece should be stopped. “When a country like Greece on a continuing basis cannot pay back debts, it must leave the eurozone,” he said. “Greece should quit by the end of the year.”

Some of the comments after the article are priceless ...

COMMENT: This is the first of many repositionings these cowardly, incompetent, selfish and manipulative politicians will make. Each will try to lob blame at the other to avoid what should be the just conclusion.

Nearly all the EU politicians were bought by the reflux of national wealth through the EU which then used these massive funds to manipulate and control national politicians to sell their electorates down the river. This will be the first in a nasty series of squirming attempts to avoid responsibility from politicians who have prostituted themeselves for selfish gain.

This is a very nasty scene. Then, again, what else can it be coming from people who have all but wrecked decent democratic systems for the purposes of career advancement and personal enrichment?

COMMENT:

"Tensions within the eurozone over how to resolve the debt crisis are turning countries against each other and threatening to rip Europe apart"

----- ----- ----- -----
There was never any doubt that this would be an inevitable outcome. It had to happen. There are two completely opposite and incompatible mindsets within the Eurozone: (1) the prudent, frugal, and hard-working Northerners; versus (2) the imprudent, improvident, and lax Latin Club Med nations.

Moreover, with the results from the most recent summit, we now know that there are two completely opposite types of psychologies amongst the EUROCRATS: (1) the honest, loyal, and honorable variety; versus (2) the dishonest, ambushing, and blackmailing variety.

Anyone who's been in a dysfunctional marriage where you have one loyal, honest, hardworking, and prudent spouse, versus the other spouse who is cheating, scamming, imprudent, lazy, disloyal, blackmailing, and backstabbing ... you know what the ultimate result will be: DIVORCE.

There is no question that the Eurozone will end in a bitter, ugly DIVORCE, where the PIIGS end up never paying back the hundreds of billions they've borrowed from the Northerners.

This will get very ugly ... and it will conclude in a vicious DIVORCE. There's no question about it. The Germans should cut their losses and file for DIVORCE now.

COMMENT: The answer is simple Mr Monti, break up the Euro Zone before it breaks up Europe, of course you don't want to hear that so you will continue down the road of destruction. Spain is already pressuring Eastern Europeans to leave the country and no doubt this will accelerate and be taken up by other countries whose finances have reached breaking point.

COMMENT: For some reason, the DT completely missed the second main part of Montis statements, which was that he urged the European governments not to act feeling bound to much to their respective parliaments!

He was actually suggesting the government should sort of overrule the parliament and in Germanys case he seems to have the Constitutional Court in mind as well.

So according to Monti, the Euro can only be saved, if governments stick to undemocratic behaviour, which for the North means to FORCE its own electorate to (forever) fund Club Med hence effectively ending democracy itself.

Quite naturally this provoked opposition amongst German politicians, with one of them stating "Germany will not abandon its democracy just in order to fund Italian debt".

COMMENT: Very surprised that Mr Aldrick does not mention an other statement by Mario Monti during that interview which has caused real anger in Germany. During the interview Monti stated: "If Governments let themselves be fully bound by the decisions of their parliaments, without preserving any room for negotiation, the break-up of Europe would be more likely than closer integration."

So a technocrat PM, hoisted to power by an EU putsch in his own country is asking for the suspension of democracy and the rule of law in all other euro countries also. The final choice according to Monti: demcocracy or the euro.

COMMENT: A Union which works only in good times is superficial, false, badly constructed and dangerous.

This characterises the EU and the Eurozone because both were set up with no democratic mandate to satisfy the obscene political vanity of a few politicians who were immeresed in the past and misinterpreted the consequences of history.
Both will fail as these artificial constructions always do.

COMMENT: The Euro was a foolish, ill-conceived experiment that failed. Break up this nonsense now, or the markets will break it up for you. Even the "Father of Euro" Jacques Delors conceded here in the "Telegraph" a few months ago that the Euro is now doomed because the politicians have violated the rules that his EU Commission had laid down.

I`m sure they`ll come up with a plan to "SAVE THE EURO" this week, like they did last week, the week before that and the week before that and so on and so forth...

"Debt crisis threatens to break up Europe"

The sooner the better...

Seeing the end of the eu would make me incredibly happy.

[Ferretlover]

... Wow, just keep printing money central banker dudes at near zero interest rates, to paper over the growing holes in the world economy. Who'd have guessed that economics was so easy, why didn't anyone ever think of this before! I mean what could possibly go wrong?

EDIT:
This article confirms suspicions that the market is absolutely bananas again at the thought of imminent money printing;

Sentiment swung so violently between Thursday and Friday’s that my head is spinning.

What changed was not so much a stronger than expected non-Farm Payrolls in the US which rose 163,000 but rather a raft of press reports reconfiguring thoughts on what ECB President Draghi actually achieved with his brinkmanship over the past week or so. The consensus seems to be that he laid out a framework through which European governments in general and Spain in particular can access a rescue.

Here we go again, it seems...let's do more of what hasn't worked before!

[dsula]

Also, I think it's the opposite, i.e., job reports are by default understated. That is because it is not in the best interest of governments to give news that will make people think that they are failing.

That could be true if you had a dictatorship. But we don't. I'm sure Repubs try everything they can to make sure employment numbers look as bad as possible. Dems do the opposite.

[Daniel_Plainview]

Debt crisis threatens to break up Europe

Tensions within the eurozone over how to resolve the debt crisis are turning countries against each other and threatening to rip Europe apart, Italian Prime Minister Mario Monti has warned.

More on the utter dysfunction in the Eurozone ... and to think that there are some people who want this basketcase system to continue?

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 very foundation of European democracy. In between the lines, bit by bit, the mammoth costs of continuing the endless bailouts or of breaking everything to pieces finally oozed to the surface.

Sunday it was Italian Prime Minister Mario Monti, whose country, after years of living beyond its means, is suffocating under a mountain of debt. He needs the European Central Bank to print a trainload of euros and massively buy up Italian sovereign bonds to force their yields down and keep Italy financially viable—which is precisely what the treaties that govern the ECB don’t allow it to do, though the ECB had done it before, despite all-out opposition from Germany, including the resignation of ECB Council Member and Bundesbank President Axel Weber and ECB Chief Economist Jürgen Stark. After buying €211 billion in sovereign bonds, the ECB stopped in March. And since then, all heck has re-broken loose.

So Monti went on attack. The Eurozone bailout chaos and Germany’s resistance to ECB printing operations have created tensions that show “the traits of a psychological dissolution of Europe,” he told the Spiegel, a threat designed for German consumption—the latest in a series of escalating threats issued by politicians of debt sinner countries. And like his predecessors, he took it a step further than anyone before him.

Further even than Alexis Tsipras, the firebrand leader of Greece’s left-wing SYRIZA party, who’d threatened during the chaotic election, “If Greece doesn’t get its next loan installment, the Eurozone will collapse the following day.” But now comes Monti—and it’s no longer just the demise of the 17-member Eurozone but the dissolution of Europe. Europe as a whole. If the ECB doesn’t print whatever it takes to bail out Italy, “the foundations of the project Europe are destroyed,” he said.

Then, indefatigable, the unelected technocrat went after democracy itself: “If governments let themselves be tied down completely by the decisions of their parliaments,” he said, and he was directly addressing Germany, “then the breakup of the Eurozone is more likely than a tighter integration”—the latter being Chancellor Angela Merkel’s brainchild and the focus of much of her efforts. Thus he’d lashed out at Germany’s democratic processes, including parliament’s involvement in some of the bailout decisions, limited as it is. Instead of allowing elected representatives of the people who will pay for the bailouts to have a say in the bailouts, Monti wants Merkel and her government to go around parliament and impose their decision on the citizenry.

“Attack on democracy,” is what Alexander Dobrindt, Secretary General of Merkel’s coalition partner CSU, called Monti’s words on Sunday. He lamented that “greed for German tax money is sprouting undemocratic flowers.” He didn’t mince words. “Mr. Monti apparently needs to be told that we Germans will not be ready to abolish our democracy just so that Italy’s debt can be financed.”

On Saturday already, Dobrindt had taken on ECB President Mario Draghi by accusing him of abusing the ECB for the benefit of his native Italy. “It’s striking that Draghi always becomes active and wants to buy sovereign bonds when Italy is once again in a tight spot,” he said. Even Draghi would have to adhere to the treaties governing the ECB. “He must decide where he stands: on the side of the stability union or on the side of the crisis countries that try to sneak their way to German money.”

Higher yields were a sign countries needed to reform, he said, and forcing yields down through bond purchases would only treat the symptoms, not the causes. Draghi’s plans, he said, reveal the life-long lie of European “centralists” in Brussels who want to guarantee “the same standard of living from Athens to Munich.” But this cannot be done, least of all through printing money for debt sinner countries. “That’s euro socialism,” he said.

Six of the 17 Eurozone countries are on life support, including Spain, whose banks got €100 billion, and whose central government will need much more. A bailout far larger than any prior bailout. And then there’s Italy....

And some food for thought: “Like Europe,” writes David Galland, “the economy of the US has been increasingly under the control of central planners at the expense of the free market.” With devastating consequences. Read.... Have You Overlooked Comprehending This Piece of the US Economic Puzzle?

It seems that Germany is finally realizing that everyone else is after their money ... and they don't like that. This game will end soon, and the final terminus will be when Germany says: "Enough! We're going to keep our taxpayers' money from now on. Dankeschön for the fun ride, though! Auf Wiedersehen!"

[ralfy]

That could be true if you had a dictatorship. But we don't. I'm sure Repubs try everything they can to make sure employment numbers look as bad as possible. Dems do the opposite.

Obviously, political opponents will challenge what is reported, but what citizens usually know is what the media state regarding the reports, and in this case, it's non-broad unemployment that's given and any adjusted criteria not explained. That takes place easily in non-dictatorships.

Thus, it's not a matter of trying "to make sure employment numbers look as bad as possible" but simply looking at broad employment indicators. Such indicators are available but they are usually mentioned only by those who study the numbers further. Failure to do so can happen in non-dictatorships, too.

[Daniel_Plainview]

Italy sinks deeper into recession as GDP plunges 0.7%

(AP) MILAN - Italy's recession deepened in the April-June period, when the economy shrank for the fourth quarter in a row, official government statistics showed Tuesday. The economy contracted by 0.7 percent in the second quarter compared with the previous three months, more than the 0.6 percent drop expected by economists surveyed by FactSet, a financial data provider.

...Compared with the same period of 2011, the economy shrank by 2.5 percent - the worst year-on-year contraction since the fourth quarter of 2009, when the economy shrank by 3.5 percent. Car production alone was down 22.5 percent in June compared with a year earlier....

[Ferretlover]

... It seems that Germany is finally realizing that everyone else is after their money ... and they don't like that. This game will end soon, and the final terminus will be when Germany says: "Enough! We're going to keep our taxpayers' money from now on. Dankeschön for the fun ride, though! Auf Wiedersehen!"

What a collection of loons. Their recipe for getting out of the hole they dug themselves is to have others help them dig it deeper. This sort of decoupling from reality is a portent of demise.

[peripato]

What a collection of loons. Their recipe for getting out of the hole they dug themselves is to have others help them dig it deeper. This sort of decoupling from reality is a portent of demise.

They've decided to go down together, although the Finns may have the foresight to bail out beforehand...what a mess it will be, one for the ages.

[Daniel_Plainview]

Bank of England slashing UK's growth forecasts to zero

The Bank of England will slash its growth forecasts close to zero tomorrow as the double-dip recession deepens and the eurozone storm closes in on UK shores.

Governor Sir Mervyn King is expected to indicate no growth for 2012 in the Bank's quarterly inflation report, compared with 0.8 per cent predicted three months ago and 2 per cent a year ago. ... The UK economy contracted by a greater-than-expected 0.7 per cent between April and June, meaning the double-dip recession is the longest since the 1950s, after the additional bank holiday for the Queen's Diamond Jubilee hit output.

Sir Mervyn is already braced for a choppy year, with events such as the Olympics expected to provide a slight bounceback, but nevertheless economists predict a bleak outlook from the central bank.

Howard Archer, chief UK and European economist at IHS Global Insight, said the Bank will "likely acknowledge that the economy has taken a significant turn for the worse and currently faces a worrying and uncertain outlook".

The Bank last month injected a further £50 billion into the economy through its quantitative easing programme, bringing the total stock to £375 billion.

But the outlook has darkened since the Bank's move as dire construction and manufacturing output drove the biggest drop in GDP since the height of the financial crisis three years ago.

Meanwhile, in the eurozone, borrowing costs in Spain and Italy remain at high levels, close to the so-called bailout territory that drove the likes of Greece and Ireland into taking a bailout from the EU....

[Daniel_Plainview]

Oil at 12-wk high on North Sea output drop, stimulus hope

(Reuters) - Oil prices jumped to a 12-week peak on Tuesday as falling North Sea output, support for more bond buying by the U.S. Federal Reserve and Middle East tensions lifted crude futures to a third straight higher settlement. Posting their highest settlements since May 15, Brent, U.S. crude and refined products futures moved above key moving averages to add technical support to the day's bullish sentiment.

The second hurricane of the Atlantic storm season threatened Mexico and a fire damaged California's second-largest refinery, lending more support to oil futures. "The news about the record low North Sea loadings got Brent going early and it has lifted everything else," said John Kilduff, partner at Again Capital LLC in New York. "Also the Boston Federal Reserve president saying he is in favor of more bond buying revived hopes about more stimulus from the Fed," Kilduff added.

Brent September crude rose $2.45 to settle at $112 a barrel, after surging past the front-month 200-day moving average of $111.28. The $112.56 intraday peak is the highest since prices hit $112.67 on May 15. U.S. September crude rose $1.47 to settle at $93.67 a barrel, after eclipsing the 100-day moving average of $93.47 and having reached $94.42. The closing price and intraday peaks were the highest since May 15.

Brent's premium to U.S. crude pushed back above $18 a barrel. ... U.S. gasoline and heating oil settled at near $3 a gallon .... North Sea crude oil output is set to fall to a record low in September, adding to supply tightness with the European Union's embargo on Iranian oil now in its second month. ...The U.S. Energy Information Administration (EIA) lowered its 2012 and 2013 forecasts for crude oil production from non-OPEC countries in the EIA's monthly report and raised its demand outlook for those years. ...

[Daniel_Plainview]

France heading back to recession, says central bank

France is headed back into recession for the second time in three years, its central bank has warned in a fresh blow to the recovery prospects of the stricken eurozone.

In a gloomy survey of the outlook for Europe's second biggest economy, the Bank of France predicted a 0.1 percent contraction in gross domestic product (GDP) for the third quarter of this year.

If that outcome is confirmed it would follow a similar fall in output for the three months to June and zero growth in the first quarter of 2012.

The survey was released alongside official figures from Germany imports and exports in the eurozone's biggest economy dropped in June and following figures on Tuesday showing Italy shrank further into recession in the second quarter.

... Faced with an economy deteriorating on almost every front, the Socialist government was last month forced to cut its growth forecast for the full year from 0.4pc to 0.3pc, and from 1.7pc to 1.2pc for 2013.

Even the revised prediction, however, is considered optimistic by the International Monetary Fund, and the Bank of France's latest survey will have made uneasy summer holiday reading for President Francois Hollande.

[OilFinder2]

AWWWW CRAP!!! DOOMER HOPES FOILED YET AGAIN AS INITIAL CLAIMS TUMBLE 6,000 TO 361,000

Fewer Americans filed applications for unemployment benefits last week, a sign the labor market may keep improving after employment picked up in July.

Jobless claims unexpectedly dropped by 6,000 to 361,000 in the week ended Aug. 4, Labor Department figures showed today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for an increase to 370,000. A spokesman for the agency said there was nothing unusual in the data.

Fewer firings mean employers are seeing enough demand to retain staff, indicating the world’s largest economy is sustaining the recovery from the recession. Labor Department data last week showed payrolls rose more than forecast in July.

“The labor market is slowly but steadily improving despite all the uncertainty created by the European financial problems, the election and the fiscal cliff,” Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania, said before the report. “There is no reason to think that job payroll increase posted in July cannot be duplicated in the months to come.”

[...]

[Daniel_Plainview]

Gold, Silver, Corn & Brent Crude are Top Performers Amid 5-Yr Fin'l Crisis

[Daniel_Plainview]

U.S. Consumer Comfort Drops To Level of "SEVERE ECONOMIC DISCONTENT"

Consumer confidence in the U.S. fell this week to the lowest level in two months as Americans became more discouraged about the economy. The Bloomberg Consumer Comfort Index dropped to minus 41.9 in the period ended Aug. 5 from minus 39.7. The gauge hasn’t climbed since the end of June. Americans’ view of the economy fell to the lowest level since February.



Greater discontent about the economy was accompanied by dimmer views of personal finances and the buying climate, a sign consumer spending will be slow to pick up. A recent increase in gasoline prices and scant improvement in the labor market are also restraining confidence among lower-income households.

“The American public is downright sour on their own economic prospects and those of the nation as a whole due to the growing labor slack in the economy,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. The share of respondents in the Bloomberg survey who rated the economy as “poor” climbed this week to a seventh-month high.

... The Bloomberg index on the current state of the economy was minus 74.4 last week, the weakest since Feb. 5, after minus 74.2 in the prior period. Eighty-seven percent rate the economy negatively, matching the previous week’s reading as the most since February and 22 percentage points more than the average in 26 years of polling.

The gauge of personal finances dropped to minus 3.7 from minus 0.4, while the buying-climate index fell to minus 47.7 from minus 44.5. Both are at their lowest levels since May.

Gasoline prices that are rising along with 8.3 percent unemployment are hurdles for Americans, whose spending accounts for 70 percent of the economy. After reaching a low this year of $3.33 a gallon on July 1, the average price of regular gasoline nationwide reached $3.65 a gallon on Aug. 7, the highest since May, according to AAA, the country’s biggest motoring organization.

[EdwinSm]

While I am of the view that the USA is in a very weak recovery. [I also believe that things could fall off the rails soon but I have no crystal balls to say when this will happen.] So in light of this I find the following interesting:

Exports increased in June and imports decreased. Exports are 11% above the pre-recession peak and up 7% compared to June 2011; imports are just below the pre-recession peak, and up about 2% compared to June 2011.
Read more at http://www.calculatedriskblog.com/#ezAZ6HkYfSPUlPTd.99

At least the gap is narrowing, but it still has a long way to go before imports and exports are in balance.

[Daniel_Plainview]

New Low: Just 14% Think Today’s Children Will Be Better Off Than Their Parents

Hope for the future generation has reached an all-time low. Just 14% of Americans expect today’s children to be better off than their parents. The latest Rasmussen Reports national telephone survey finds that 65% of American Adults do not expect today’s children to be better off than their parents. Twenty-one percent (21%) are not sure what to expect. (To see survey question wording, click here.)

The national survey of 1,000 Adults nationwide was conducted on July 22-23, 2012 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.

[Daniel_Plainview]

China's July export growth tumbles from 11.3% to 1%

China's exports slumped in July, as faltering demand from the country's two biggest foreign customers, the European Union and United States provided further evidence that the global economy is stalling.

Chinese exports grew by an annual rate of 1pc in July, the weakest since January, as exports to the EU fell by almost 16pc. This compares to growth of 11.3pc in June, and falls well short of economists' predictions for growth of 8pc.

July imports rose 4.7pc from a year earlier, the weakest since April and also well short of expectations for an increase of 7pc.

Earlier this month, Korea reported an 8.8pc contraction in July exports and Taiwan’s exports slumped by 11.6pc during the same period.

"Given this backdrop, the 1pc year-on-year from China merely reconfirmed that the severe headwind from the euro zone crisis and the US slowdown is blowing harder," said Wei Yao at Societe Generale.

[dolanbaker]

...and yet the price of oil remains high!

[Daniel_Plainview]

...and yet the price of oil remains high!

One of the worst things that could happen to the central planner's fragile house-of-cards would be an escalation of commodity prices. This would lead to inflation, which would force interest rates up.

Corn Prices Surge 60% Since June, Whilst Yields to Fall to 17-Year Low

WASHINGTON — This year’s corn yield is projected to be the lowest since 1995, according to an Agriculture Department report that sharply cut production estimates for some major crops because of damage from the nation’s worst drought in 56 years.

The new data raises the possibility of even higher food prices as corn and other crop prices rise to record highs.

The corn yield is expected to be 123.4 bushels an acre, the lowest in 17 years, and corn prices are projected to reach a record $7.50 to $8.90 a bushel, the report said. An earlier report projected about 146 bushels an acre.

After favorable spring weather, United States corn production had been projected to hit a record high, approaching nearly 15 billion bushels, as farmers had planted the most acreage since the late 1930s to capture profits from what were already the highest corn prices ever.

Then the drought set in, projections of a bumper crop evaporated and prices began to climb.

The new corn yield forecast was a bit worse than some private analysts had expected. Analysts had estimated the yield would be around 127 bushels an acre, with a range of 117.6 to 135 bushels an acre.

The report said that soybeans were expected to be 36.1 bushels an acre — 4.4 bushels an acre below last month’s government estimate and 5.4 bushels an acre less than last year. Soybean prices are expected to be $15 to $17 a bushel, the government said.

The report’s data on meats was mixed. Beef and poultry production are expected to increase this year as livestock producers cull or sell their herds because of higher feed cost. Eggs, milk and pork production are expected to decline because of hot weather and feed prices.

The government report provides the most authoritative view yet of the weather damage. The United States is the world’s largest exporter of corn, soybeans and wheat.

The Agriculture Department’s new estimates are based on surveys of farmers and its own experts inspecting fields for the first time since the drought began to rally prices in mid-June.

On Thursday, corn prices rose 1 percent and soybeans rose 3 percent.

Corn futures rose to $8.29 a bushel, the highest price ever for a Chicago Board of Trade corn futures contract and above the previous record of $8.28 that was set by the spot September contract three weeks ago. Many analysts said they expected the prices to go even higher as the drought continues to punish the Midwest and squeeze grain supplies.

[Anvil]

In part i reckon the oil price remains some what supported in expectation of more QE.

QE if it happens will push the price of drought effected commodities and oil into the revolutionary range and this time the global economy will collapse. If indeed the drought will not achieve this end already.
Its really hard to pick at what GDP range the indian economy will fall to before it collapses my guess is below 4%.