tuesday brainstorming

1. Things are getting very messy again as obviously the depression which they try to hide with cooked numbers is very present now as even Germany has stopped growing in official terms. That puts the Euro story in a very dangerous spot but its rather a competition now who is worse of. It seems that EU banks are less well capitalized since they had to suffer big losses with the sovereign debt crisis as SOCGEN runs on fumes with 2% capital ratio with a 50 times leverage thats worse than Lehman was officially before it collapsed. Any bigger price swing in bonds will wipe than out and not just them. 

Germany would be far better off exciting the EU right now as the bill to bail out all will be unbearable but the problem rather is if Germany would step out and reintroduce the DM the same which happened to Swiss would happen DM would explode undermining the biggest asset the export industry but that is rather the least of all concerns. The real one would be the Euro and especially the PIIGS would crash right away triggering a global financial collapse.

What we have now is the blunt consequences of this bullshit globalization campaign which just helped Wallstreet and CEO’s to get rich as the working class was arbitraged against cheaper labor or their labor cost reduced in general. The other gainer were some new billionaires in emerging markets as some funds were transferred to them. THe working clas in developed countries were the biggest losers. Initially it even dropped inflation temporarily but the aftermath is with the world bankrupt the money printing now will destroy the remains of the middle class in the developed world and throw the emerging markets back into turmoil all together.


Global Contraction Fears Soar As German, European GDP Misses Send Markets Broadly Lower

Submitted by Tyler Durden on 08/16/2011 – 07:07

Just when Europe managed to get away from the headline rotation for one whole day, it is back with a thud, reminding everyone that at the heart of it all is not a liquidity crisis but a solvency one, after both German and EU GDP surprisingly missed consensus. And what a surprise it was: while everyone was talking about stagflation in the US, the UK, even China, few if anyone dared to mention that word in the same sentence with Germany. That may change after Q2 GDP expanded by just 0.1% in Q2, on expectations of 0.5% growth and down from a downward revised 1.3% (from 1.5%) previously, (2.8% growth Y/Y vs exp of 3.2%). According to the stats office the weak result was primarily due to weaker net trade and consumption. Well if export-focused and mostly wealthy Germany can’t generate enough growth through these two core sources of economic output, then nobody can. The immediate result of this datapoint was Commerzbank, and soon other, analysts lowering their GDP forecasts for 2011 to 3% from 3.4%. Germany is still expected to grow faster than the rest of the Eurozone but not by much any longer as this latest decoupling thesis starts to implode. And speaking of Eurozone GDP, it too surprised to the downside, printing at 0.2% on expectations of 0.3$ Q/Q, down from 0.8% previously (or up 1.7% Y/Y on expectations of 1/8%). The accelerating contraction of the European (and German) economy proves that just like in 2008, the ECB’s series of rate hikes was the most misguided decision possible by the world’s most clueless central bank, and anyone hoping for more rate hikes can kiss such dreams and aspirations goodbye.The net result: yesterday’s entire no volume stock market levitation is about to be undone. Too bad the ECB can’t buy some extra GDP for its insolvent (and solvent… for now) member countries.


~ by behindthematrix on August 16, 2011.

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