Eurostat confirmed earlier today that Europe has so far avoided recession. At least, it hasn’t experienced what Economists call a cyclical peak. During the third quarter of 2019, Real GDP expanded by a thoroughly unimpressive +0.235% (Q/Q). This was a slight acceleration from a revised +0.185% the quarter before. The real question, though, is whether the business cycle approach means [...]
Some further odds and ends of European data. Beginning with Continent-wide Industrial Production. Germany is leading the system lower, but it’s not all just Germany. And though manufacturing and trade are thought of as secondary issues in today’s services economies, the GDP estimates appear to confirm trade in goods as still an important condition and setting for all the rest. [...]
It’s another one of those things that just blows up the whole convention, another pretty clear sign that the mainstream has it all backward. We are seeing it play out right now with China. The Chinese are being accused of unfair currency manipulation, the sort of “competitive devaluation” that fills whole chapters in the Keynesian Economics textbooks. The idea is [...]
It is ironic that the setting for his speech was London. The UK, of course, never gave up the pound in favor of adopting the euro. Still, as the years drag on the biggest menace to Europe’s common currency isn’t a profligate Greek government nor the unfavorable productivity of Club Med. The euro may not disappear all at once, but [...]
It wasn’t the basis for rational analysis, it was a very public admission of bias and error. We don’t know why inflation ultimately will do what we believe it will, they said, we just believe that it will so you should, too. It sounds ludicrous, but it is actually very much in keeping with standard Economics. The puppet show. What [...]
In late March, as global pessimism was renewed in the world’s bond markets, ECB President Mario Draghi appeared as he always does to urge optimism. Yes, Europe’s economy in particular didn’t finish 2018 as he had been expecting. But a soft patch, Draghi said, wouldn’t necessarily “foreshadow [a] serious slump.” The question on the minds of bond investors is, how [...]
These things are all related, not that they are in any way connected by conventional thoughts on the subject of the global economy. Two European officials are now on record hinting at an ECB “pause.” There is one already underway in the US, Federal Reserve officials past and present debating how long it might last while markets price probabilities for [...]
Maybe blame the ECB. On June 5, 2014, Europe’s central bank announced a change in monetary policy. Beginning June 11, their deposit account mechanism that acts as a hard floor for European money rates would be set below zero for the first time. It would mean any funds left on deposit with the ECB in this account would be “paid” [...]
The word contagion is easy enough to understand. Whether the spread of disease or disaster, sometimes it is difficult if not impossible to contain. In financial terms, contagion is often thought of along the lines of 2011; Greece started it and it spread throughout the rest of Southern Europe. The euro was coming apart, and what “it” was didn’t seem [...]
Last year around this time, the tropics provided some unintentional basis for what would become hysteria. Hurricane Harvey by soaking a major metropolitan area with a biblical amount of rainfall delighted Keynesians everywhere. So much destruction, so much economic growth potential on the rebuild. Then Irma flirted with the Gulf Coast spine of Florida for good measure. For several months, [...]
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