Europe In Double Dip Recession

Euro Zone Falls Into Second Recession Since 2009 -- Reuters

(Reuters) - The debt crisis dragged the euro zone into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday.

The two leading economies both managed 0.2 percent growth in the July-to-September period.

But the resilience could not save the austerity-hit 17-nation bloc from overall contraction as the likes of The Netherlands, Spain, Italy and Austria shrank.

Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2-percent drop in the second quarter.

Those two quarters of contraction put the euro zone's 9.4 trillion euro ($12 trillion) economy in recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.

Read more ....

My Comment: Countries like Greece and Spain are in depression, and with massive debts across Europe .... I doubt that this will change in the next few years. What strikes me about this economic crisis is that the unrest has not escalated above what has been happening in the past few months .... but with a hard winter approaching, who knows what will be happening on the streets.

Europe Is Only Delaying The Inevitable Euro Collapse

Germany's Chancellor Angela Merkel (left) and European Commission President Jose Manuel Barroso. The banking risks of the European periphery are being progressively foisted onto the taxpayers of the more solvent core Photo: REUTERS

Euroland Will Pay For This Monetary Madness -- Jeremy Warner, The Telegraph

The flood of cheap money from the European Central Bank is storing up grave trouble for the future.

When something looks dangerous, it generally is. And few things look quite so high-wire right now as the European Central Bank’s efforts to hold the euro together by flooding the banking system with free money.

This week, the ECB injected a further 529.5 billion euros via “long-term refinancing operations”, or LTROs, bringing the tally to more than 1 trillion euros.

Read more ....

My Comment: In situations like this, I always like to remember the following Ray Bradbury saying .... The gargoyles have taken over the cathedral.

Indeed.

As for Europe today .... and what to expect .... Jeremy Warner's last paragraph sums it up perfectly ....

.... Europe has no strategy for growth, no strategy for jobs, and in truth, no strategy for saving the euro. The project is broken beyond repair.

How The Unraveling Of Greece Is Impacting Europe

(Click on Image to Enlarge)

European Politicians In Denial As Greece Unravels -- Spiegel Online

Europe's politicians are losing touch with reality. Greece is broke, and yet Brussels wants to send the country billions in new loans, to which there is growing opposition within the coalition government in Berlin. Rescue efforts are hopelessly bogged down by bickering over who will ultimately step up.

Martial music booms from the loudspeakers as warlike images gallop across monitors. A short euro crisis film montage shows police officers being posted in front of the parliament building in Athens and the jostling of frantic reporters, then US investor George Soros uses grim words in an appeal to rescue the euro zone. "The alternative is just too terrible to contemplate," he says.

Read more ....

My Comment: To have a better understanding on what are the human costs from Europe's debt/financial crisis .... check out this article.

As European Economies Stagnate (Or Get Worse), Leaders Warn Against Extreme Populism

Hungarian forints notes are seen in this photo illustration taken in Budapest, Friday. Analysts warn that Hungary's economy is approaching "meltdown" contributing to the downward spiral of the forint. Laszlo Balogh/Reuters

As Economies Teeter, Leaders In Europe Warn Against Extreme Populism -- Christian Science Monitor

Responding to a question on the latest European economic crisis in Hungary, Italy's minister of economic development warned: 'Our worst enemy right now is populism.'

Hungary's economy is approaching "meltdown," analysts warn, adding another financial crisis within Europe and raising concerns about more extreme populist moods gaining ground.

The forint, Hungary's currency, has been spiraling downward. The European Commission says the nation is expected to have the lowest growth and highest debt in 2012 among the former Soviet satellites of Eastern Europe.

Read more ....

My Comment: I disagree with Italy's minister of economic development .... the worst enemy right now are politicians like him who propose the same remedies that got Europe into this debt crisis in the first place.

No U.S. Leadership In Today's European Financial Crisis

Barack Obama Is An Irrelevance When It Comes To The European Financial Crisis -- Niles Gardiner

There was a time when US presidents showed real leadership in Europe – think of Ronald Reagan’s magnificent “tear down this wall” speech in Berlin in 1987 for example, standing up to the Soviet Empire in the defence of freedom. With Europe facing its biggest financial crisis since the 1930s, today might be another moment when a US president could stand with European allies while projecting American strength and leadership at a time of great fear and uncertainty.

Read more ....

My Comment: In my life time this is the first time that I have seen the U.S. absent in a European crisis. Leadership .... totally absent. But he is not the only to blame .... the Congress, US media, academia .... no one sees the disaster that is unfolding, and worse .... give the impression that they do not even care. But then again .... lets face it .... the US is just as broke as Europe.

Update #1: Obama to EU: Take Decisive Action on Debt -- FOX News
Update #2: US will not help pay for Europe's debt woes -- AP
Update #3: Euro summit shows Obama's desperation -- CBS

The Euro Is Unravelling With Severe Repercussions For Everyone (This Includes You)

Italy and Spain are likely to be forced to accept some international help as the cost of their debts has risen to unsustainable levels of about seven per cent. The Telegraph

Italy Is Closer To Collapse Than Anyone Realized, And So Is The World -- Business Insider

Some stories in European press (La Stampa - Zero Hedge link) suggest that Italy is working on a very big loan package from the IMF. I have no doubt that there are ongoing discussions. There has to be. Either someone puts a finger in the dike or Italy goes tapioca.

That thought is difficult for me to fathom. How could we be so close to the brink? At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still still thinks that Italy can pull off a miracle, they are wrong. I’m certain that the finance guys at the ECB and Italian CB understand this. I repeat, there is a zero chance for a market solution for Italy. Either the ECB (aka Germany) steps in and underwrites the debt with some form of Euro bonds or the IMF (aka the USA) steps in with some very serious money.

Read more ....

More News On the Euro Crisis

Britain draws up emergency plans for collapse of Euro after warnings Italy needs £500bn bailout -- Daily Mail
IMF drawing up £517bn package to save Italy, Spain and the euro -- The Telegraph
IMF readying 600 billion euro bailout for Italy -- Business Recorder
Sources: IMF to Offer Italy a 600 Billion Euro Bailout Via ECB Funding -- Economonitor
Germany, France plan quick new Stability Pact: report -- Reuters
Germany, France eye radical push for euro zone integration -- Money Zone
Euro Zone Leaders Weigh New Budget Rules -- New York Times
Germany, France examine radical push for eurozone integration -- Reuters
World's biggest banks brace for a Euro Zone split -- Economic Times/New York Times
European debt crisis: Investors’ confidence shows signs of crumbling -- Washington Post
Is a Eurozone breakup now inevitable -- and imminent? -- L.A. Times
So what happens if the euro breaks up? -- John Dizard, Financial Times

Germany Has Had Enough Of This Euro Mess

Angela Merkel is under pressure to increase bail-out funds for Europe and sanction ‘money-printing’ measures. Photo: Reuters

It Is Now Becoming Clear Germany Has Had Enough Of This Euro Mess -- The Telegraph

The Anglo-Saxon world is feeling smug this weekend. UK and US policymakers are counting their blessings they’re not directly embroiled in the historic debacle that is the single currency.

This euro crisis is obviously very seriously undermining global investor sentiment. The negative impact on growth, both in Britain and the States, is clear. It is axiomatic that the financial chaos stemming from a fully-blown, market-induced “euroquake” would cause deep aftershocks everywhere, not least across the rest of the Western world.

There is palpable relief, though, in London and Washington that attention is now squarely on the eurozone’s woes. That makes life easier for the deeply indebted Anglo-Saxon governments – which is particularly welcome for Chancellor George Osborne, given that he is about to give his Autumn Statement.

Read more ....

My Comment: If I was a German, I would be appalled at the idea of financing the rest of Europe .... but that is what has been happening for years. Inevitably .... the Euro will collapse for the simple reason that the Germans will soon say no more, and when the elites figure this out .... we can then stomach the pain and make plans to move forward.

Update #1: IMF drawing up £517bn package to save Italy, Spain and the euro -- The Telegraph
Update #2: Britain draws up emergency plans for collapse of Euro after warnings Italy needs £500bn bailout -- Daily Mail

Prepare For Riots In Euro Collapse

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way Photo: Bloomberg

Prepare For Riots In Euro Collapse, Foreign Office Warns -- The Telegraph

British embassies in the eurozone have been told to draw up plans to help British expats through the collapse of the single currency, amid new fears for Italy and Spain.

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.

Read more ....

My Comment: The impact on the banking system will be profound. It is easy to see a scenario in which bank lending freezes up, bank withdrawals severely regulated (i.e. limited), and massive government bailouts of stressed financial institutions coupled with real and severe government cutbacks in their own budgets taking place. Will there be anger on the street .... the real question is .... how uncontrollable will it become.

Italy's Debt Crisis Will End The Euro

Italy Collapse Would Be The 'End Of The Euro' -- Euronews

France and Germany have warned that a blow-out in Italy's giant debt mountain would signal "the end of the euro."

Italy had to pay record rates to raise €10bn this morning, while France and Germany warn that a blow-out in its giant debt mountain would signal "the end of the euro."

Meanwhile, EU Economic and Monetary Affairs Commissioner Olli Rehn has upped the pressure on Italian Prime Minister Mario Monti's new government, calling for "an ambitious timeline" on economic reforms.

"Italy is faced with formidable challenges," Mr Rehn told Italian lawmakers during a visit to Rome.

Read more ....

My Comment: When you read stories like this, this, this, and this .... you will then quickly realize that the markets have already factored in a Euro collapse. What we are now witnessing is just show .... followed by excuses and a wonderment on why did things go so wrong.

European Countries' Credit Ratings (Graphic)

WNU Editor: Go to this link for each country`s report from one of the three credit agencies.

Euro On ‘Death Watch’

Euro On ‘Death Watch’ After Investors Spurn German Bonds -- CNBC

Investors began to fear the worst for the euro after unusually weak demand at an auction for bonds from Germany, the region’s largest economy. One analyst went so far as to put the currency on a “death watch.”

Germany sold just 60 percent of the 6 billion euros in 10-year bunds it brought to auction, about the weakest demand seen for the country’s debt in the currency’s 16-year history, economists said. The rejection of debt from Europe’s safe harbor marks a new stage for the crisis.

Read more ....

Update: "Disastrous" bond sale shakes confidence in Germany -- Reuters

My Comment: This blog pointed out Germany's weaknesses yesterday. Bottom line .... almost every major country in Western Europe has spent too much, accumulated too much debt, and now .... has trouble paying the bills because interest payments are eating up their budgets.

Is Germany The Next Euro Crisis Country?

(Click on Image to Enlarge)
Graphic: Germany's debt compared to other euro zone members

Germany's Finances Not As Sound As Believed -- Spiegel Online

The German government likes to pride itself on its solid finances and claim the country is a safe haven for investors. But Germany's budget management is not nearly as exemplary as it would have people believe, and the national debt is way over the EU's limit. In some respects, Italy's finances are in much better shape.

When it comes to fiscal stability, frugality and responsible economic management, German Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble have only one role model: themselves.

The chancellor praises herself and her team for having "a clear compass for reducing debt," and insists: "Getting our finances in order is good for our country."

Her finance minister, a member of Merkel's conservative Christian Democrats, is no less effusive. Germany, says Schäuble, is a "safe haven" for capital from around the world, because "the entire world has great confidence in both the performance and soundness of the fiscal policies of the Federal Republic of Germany."

Read more ....

My Comment: While concerns about Germany are valid .... in Greece .... a quiet run on the banks is now accelerating.

Germany Chancellor Angela Merkel described the ongoing euro zone crisis as the continent's “toughest hour” since World War II on Monday as new leaders in Italy and Greece hustled to form governments amid growing fears over their debt-hit economies.

Eurozone Crisis 'Toughest Hour Since World War II’, Says Merkel -- France 24/Reuters

REUTERS - German Chancellor Angela Merkel said on Monday that Europe could be living through its toughest hour since World War Two as new leaders in Italy and Greece rushed to form governments and limit the damage from the euro zone debt crisis.
A rally on financial markets sparked by the appointment of respected European technocrats in Rome and Athens soon stalled. Analysts warned that daunting obstacles could hinder the decisive action needed to revive their ailing economies.

Read more ....

More News On Europe's Debt/Financial Crisis

Tony Blair: Euro collapse would be catastrophic -- BBC
Even as Governments Act, Time Runs Short for Euro -- New York Times
Europe Could Be in Worst Hour Since WW2: Merkel -- New York Times/Reuters
As European Nations Teeter, Only Lenders Get Central Bank’s Help -- New York Times

Italian prime minister nominee meets with political leaders -- CNN
Monti tipped to lead Italy after Berlusconi quits -- CNN
Monti Rushes to Fashion Italian Government as Markets Offer Little Relief -- Bloomberg
Getting rid of Silvio Berlusconi was the easy bit for Italy -- Nils Pratley, The Guardian
Analysis: Berlusconi's end could trigger political earthquake -- Reuters

Greek PM: Remaining in Euro "Is Only Choice" -- ABC News/AP
New Greek PM Papademos urges structural reform -- BBC
Greek Prime Minister: Staying In Euro Is Only Solution -- Wall Street Journal
Greek PM commits to EU reforms, warns eurozone role at stake -- AFP

French, German leaders stress urgency with Greece's new prime minister -- CNN
Analysis - Euro zone treads obstacle course to crisis exit -- Reuters
The Euro in Crisis -- Shannon Doyne, New York Times
Will the European Central Bank save the eurozone? -- Laurence Knight, BBC
Euro Collapse Plus Iran Strike Equals Armageddon -- Rory Fitzgerald, Huffington Post

Euro Collapse Would Be Catastrophic

Tony Blair: Euro Collapse Would Be Catastrophic -- BBC

Former prime minister Tony Blair has told the BBC the collapse of the euro would be "catastrophic" - and Europe must get behind it.

Mr Blair said he hoped it would not collapse, but European leaders faced "very difficult and painful" choices.

A "long-term framework of credibility" was needed, he said, which included "strong fiscal co-ordination".

Chancellor George Osborne told the BBC there must be more co-operation on tax and spending in eurozone countries.

Read more ....

My Comment: Tony Blair's warnings are a little too late .... the German's are getting ready for it. The above Al Jazeera video report is a good summary on what is happening in Europe.

Europe's Debt Crisis Out Of Control

Europe's Debt Crisis Spiraling Out Of Control -- The Guardian

Reports that Germany and France have begun talks to break up the eurozone amid fears that Italy will be too big to rescue

Fears that Europe's sovereign debt crisis was spiralling out of control have intensified as political chaos in Athens and Rome, and looming recession, created panic on world markets.

Reports emerging from Brussels said that Germany and France had begun preliminary talks on a break-up of the eurozone, amid fears that Italy would be too big to rescue.

Read more ....

More News On Europe's Debt Crisis

Debt crisis: while Rome burns, the eurozone fiddles -- The Telegraph
Euro Fears Spread to Italy as the Debt Crisis Deepens -- New York Times
Compared to this, Greece was just a sideshow. Italy could blow Europe to pieces -- Daily Mail
Crisis in Italy spurs fears of euro zone break-up -- Reuters
Italy Fears Rattle World's Investors -- Wall Street Journal
Debt Crisis Hits Global Markets -- Voice of America
Financial markets fear new threat to Eurozone -- L.A. Times
Faith in Italy crumbles -- Financial Post
Heavy-handed pressure on Italy, Greece may yield little, analysts say -- Washington Post
Chart: How Italy could drag down Europe -- Washington Post
Eurozone: where do we go from here? -- Larry Elliott and Heather Stewart, The Guardian

Chaos In Europe As G20 Members Voice Frustration Over Greece's Changing Positions On It's Debt Deal

Greek Farce! PM Calls Off Referendum And Refuses To Quit In Eurozone Fiasco -- Daily Mail

* George Papandreou's fate will be decided by no-confidence vote in Greek Parliament tomorrow

* Greece finance minister breaks ranks with Papandreou
* Country could face enforced bankruptcy and ejection from the euro
* China refuses to invest in euro stability fund until situation is resolved

The Greek eurozone bailout fiasco descended into total farce this afternoon as Prime Minister George Papandreou apparently called off his plans for a referendum.

After an emergency Cabinet meeting, Papandreou also announced that he had no intention of resigning, leaving his fate to tomorrow's no confidence vote.

The remarkable about turn left some commentators claiming it had all been a ploy to get the Opposition to support the euro bailout.

It is believed his Pasok party will now speak to with the main Opposition party, New Democracy, to hammer out a deal to take the country forward.

Read more ....

More News On Europe's Debt Crisis

Debt crisis: live -- The Telegraph
Debt Crisis: Live -- The Guardian
Live: Greek eurozone crisis -- BBC
Eurozone crisis: live blog -- Financial Times

Greek PM scraps referendum on Greek debt plan -- AP
Greek PM on brink, world tells Europe to fix crisis -- Reuters
Greek PM ready to drop referendum -- AFP
Greek Prime Minister Scraps Plan To Put European Debt Deal To Referendum, Officials Say -- New York Daily News/AP
Reports: Greece to scrap bailout referendum -- USA Today
Greek PM says open to scrapping referendum plan -- Reuters
Reports: Greek PM Refuses to Resign, Drops Referendum Plans -- Voice of America
Greece Backs Away from Referendum Plans -- Spiegel online

EU Threaten Greece With Expulsion If Bail-Out Is Refused

Greece Will Be Cut Adrift If Bail-Out Is Refused, Says EU -- The Telegraph

Greece last night faced the threat of bankruptcy within weeks after the EU said it would not provide any more funding to the beleaguered country unless it agreed to support the euro bail-out.

The Greek government is expected to be unable to pay wages for state workers and pensions next month without a planned injection of £8 billion of EU cash.

George Papandreou, the Greek prime minister, met his French and German counterparts ahead of today’s G20 summit of world leaders.

Mr Papandreou has called a referendum on whether the Greek public supports the bail-out. The decision has plunged the rescue into turmoil.

Read more ....

More News On The EU/Greece Debt Crisis

Greece to Determine Euro Membership in Vote -- Bloomberg
Greek Premier Pledges Vote on Europe’s Debt Deal -- New York Times
G20 leaders to meet amid Greek fears -- BBC
France and Germany Ask Greece to Respect Euro Bailout Plan -- Voice of America
France, Germany give Greece ultimatum on euro -- Reuters
Greece’s Euro Membership to be Put to Vote -- Bloomberg
HIGHLIGHTS-Comments by policymakers at G20 in Cannes -- Reuters
Timeline: Greece's debt crisis -- Reuters

Europe's Debt Crisis Worsens As Greece Throws A 'Monkey-Wrench' With Surprise Referendum Plans

European Leaders Set For Showdown On Greek Debt Referendum -- Voice Of America

European leaders are set for a showdown Wednesday with Greek Prime Minister George Papandreou over his call for a referendum on a debt-relief agreement.

French President Nicolas Sarkozy and German Chancellor Angela Merkel summoned the Greek leader to Cannes, France, a day before the G20 summit. Greece is not a member of the group, but Mr. Papandreou's referendum plan has become the summit's central issue.

Read more ....

More News On Europe's And Greece's Debt Crisis

Debt crisis: live -- The Telegraph
European debt crisis live -- The Guardian
Pressure on Greece ahead of G20 -- BBC
Greek Prime Minister Heads to France to Ease European Leaders Over Debt Deal -- FOX News/AP
Greek PM Explains Vote to Furious European Leaders -- ABC News/AP
EU Pushes Papandreou on Greek Euro Vote as G-20 Leaders Meet -- Bloomberg Businessweek
European Leaders Prepare for Showdown on Greek Debt Referendum -- Voice of America
Greek cabinet supports call for referendum on bailout -- CNN
For Greek PM, political reality trumps fury of Sarkozy, Merkel -- Christian Science Monitor
Greece sticks to bailout vote, as U.S., Europe weigh options -- USA Today
Greece Faces Grilling at G-20 -- Wall Street Journal
EU Official: No Disbursement Of Greek Aid Without Clarity -- Wall Street Journal
Analysis: Europe has few options over Greek vote -- AP
Is Greece on its way out of the EU? -- Al Jazeera

So Much For The Euro-Greek Bailout

FTSE Drops After Greece Calls Shock Referendum On Cuts Which Threatens To SINK Euro Bailout -- Daily Mail

* FTSE 100 falls 2.6 per cent after opening
* Dax, Nikkei, Dow Jones and Nasdaq also tumble
* 59 per cent of Greeks think deal is ‘negative’
* 'No' vote could prompt country's exit from the Euro
* 228-year-old US brokerage MF Global goes bankrupt due to euro bonds
* First Greek referendum since 1974 when monarchy was abolished
* Hopes of Chinese red knight riding to slay euro debt dragon 'misplaced'
* Experts warn of second global recession and social unrest
* Comes as UK growth figures 'better than expected'

Financial markets around the world have tumbled in reaction to the shock announcement that Greece is to hold a referendum on the latest aid package to solve its debt crisis.

The FTSE was down 2.6 per cent , Germany's Dax fell by 4 per cent, the Dow Jones fell 2.3 per cent and France's CAC-40 lost 3.3 per cent.

Markets in Asia have also fallen with Japan's Nikkei closing with a 1.7 per cent drop, Hong Kong's Hang Seng losing 2.5 per cent and Australia's S&P/ASX shedding 1.5 per cent.

Read more ....

More News On Greece's Decision To Have A Referendum On The EU Debt Agreement

Greek Vote Gamble Stunned Euro Partners, Merkel Allies Say -- Bloomberg Businessweek
Greek leader's referendum bombshell -- The Guardian
Eurozone debt crisis: Markets dive on Greek referendum -- BBC
Fury in Germany after Greek referendum call -- Reuters
Greece’s Referendum Step Leaves Europe Aghast -- Wall Street Journal

My Comment: I guess the Greeks are not satisfied with an agreement that gives them a 50% cut in their debt .... instead .... this call for a referendum is to not only a tactic to give political cover for Greek leaders, but to also position themselves to ask for more. Sighhh .... this is going to be not only a political disaster, but an economic one for Greece and for the EU. I expect the referendum will overwhelmingly reject the EU bailout agreement resulting in the road being paved for Greece to leave the EU and to declare a "defacto state" of bankruptcy.

Europe's One Trillion Euro Bailout Fund Announced Yesterday Does Not Really Exist

Help Us Out, Europe Begs China: Desperate Euro Chiefs Look East To Fund Huge Bailout Gamble -- Daily Mail

* Further embarrassment as one trillion euro bailout fund announced yesterday does not really exist

Europe is holding out the begging bowl to China in an effort to keep the rescue package for the single currency alive.

In a clear sign of how the balance of world power has tipped towards the East, EU leaders hope China can be persuaded to hand over huge sums to help bail out the eurozone.

In a further embarrassment, it emerged that the one trillion euro bailout fund announced in the early hours of yesterday does not really exist.

Read more ....

My Comment: It is bad enough that there is no money in the fund .... what is even more worse is that there is no commitment from problem countries like Greece, Italy, Spain, etc to balance their budgets in order to avoid this debacle from repeating itself in the next year or two.

To say that this is unbelievable .... especially after yesterday's massive gains on the stock market .... now that is an understatement. Therefore .... to save face .... someone has to be found to pony up the money.