Sunday, May 19, 2013

It's Not Pretty: The EuroZone Economies

The EuroZone is in the down phase of the business cycle and government regulations make it difficult for startups in most EZ countries to launch, regulations in most EZ countries also make it risky for established firms to hire. Further, unemployment packages make it attractive for most to stay unemployed once they are laid off. Thus you have economies that look like this. Unlike the European Central Bank, which has been doing only very modest money printing, the Fed has been flooding the markets, which has caused, yet another manipulated boom in the housing sector and stock market, that will, soon enough, experience another bust.


  1. I comment that the chart labeled “sustained pain” shows divergence between the US and the Eurozone economic GDP, commencing in the third quater of 2011, largely due to anti-competitiveness, national wage contracts, banking insolvency, as well as socialist clientelism. Federal Reserve money printing operations stimulated M2 money growth in the US, which in turn greatly rewarded investors in Retail, XRT, Homebuilding, ITB, Biotechnology, IBB, IPOs, FPX, Dynamic Media, PBS, Pharmaceuticals, PJP, US Infrastructure, PKB, and Consumer Discretionary, IYC, as is seen in their ongoing combined Yahoo Finance chart ...

    The final phase of the Global Business Cycle will be commencing soon; the world will be entering into Kondratieff Winter most likely during the last two weeks of May 2013; another bust just like 2008, only much, much worse is coming.

    With the commencement of competitive currency devaluation on Friday May 10, 2013, specififically with the world’s individual currencies excluding the US dollar, trading lower, and with not only Aggregate Credit, AGG, trading lower, but also the highly indebted Electric Utilities, XLU, as well, the world pivoted from Liberalism’s age of investment choice, to Authoritarianism’s age of diktat; the epoch of inflationism ceased, and the epoch of destructionism commenced.

    In compliment of the currency traders, who have started a sell of the world currencies, the bond vigilantes have gained a nascient control of interest rates, as is seen in their call of the Interest Rate on the US Ten Year Note, ^TNX, higher to 1.95%, and a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening.

    And during the week ending Friday May 17, 2013, the coordinated intensification by the central banks throughout the world for the reduction of interest rates, established Global ZIRP, with Bento te writing 511 Interest cuts and sluggish economic growth, causing a blow off stock market top, seen in the chart of World Stocks, VT, rising 1.2%, and seen in the chart of the S&P 500, $SPX, SPY, closing at 1,667, up 2.1% for the week; it has risen 1,000 points from the March 2009, 667 low, in 50 months.

    The world central banks’ monetary policies of Global ZIRP, especially coming on strong since April 18, 2013, have finally started to turn “money good” investments, bad. A case in point is Australia’s Westpac Banking, WBK; in contrast, currency carry trade endowed, Lloyds Bank, LYG, US Too Big To Fail Bank Citigroup, C, and Regional Bank, RF, rose strongly in a Global ZIRP grand finale finish of investment mania. Failing of Global ZIRP, stimulated investors to derisk out of Nation Investment in Australia, EWA; in contrast Malaysia, EWM, rose strongly on Global ZIRP cool aid. And souring Global ZIRP, in particular the debt dynamics of Australia Dividends, AUSE, turned this investment lower, while investors pursued Pharmaceuticals, PJP, Small Cap Value, RZV, and Premium Reits, KBWY, Another example of investors derisking on excessive credit policies, is the trade lower in Japanese Treasury Bonds, as seen in their inverse, JGBS, trading higher, in contrast Japan, EWJ, rose strongly.

    It is sovereignty that provides order and begets seigniroage, that is moneyness. The rule of Liberalism’s democratic nation states provided a moral hazard, toxic credit, and global carry trade financed seigniorage, via the genius of the Milton Friedman Free To Choose fiat money system.

    Seigniroage, that is moneyness, will no longer come from decmocratic nation states, which supported economic growth, global trade and corporate profitability; but rather from the word, will and way of sovereign regional leaders such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as statist public private partnerships, the ECB, as they invoke mandates for regional security, stability, and sustainability.

    1. Not at all. I have never heard of any those people you mentioned in the last paragraph so why would I accept a Dijsselbloem dollar any more than a zimbabwe dollar? there will not be P/P partnerships as the populace of the west will increasingly vote out or topple governments seen as too chummy with special interests(what they replace them with is a different story)same with the supra national agencies, they rest on the national states and when their resources shrink, those international agencies will be the second thing that goes after the welfare payments to sheltered workshops and the disabled, as while states are quite happy with getting things for 'nothing', they are not happy with others other getting them at their expense.

  2. That seems like yet another blow. What is more important is the fact the housing boom is more often than not followed by a let's wait for another hit!

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