European Highlights

These are some of the more important stories concerning the European economy.

Amid the recent earnings reports, equity markets have been trading mostly lower. The main contributor to that is Arcelor Mittal which came sub expectation and reported a quarterly income of 1.59 billion euros, while the general consensus stood at 1.78 billion euros. This result is important given the position Arcelor Mittal holds in the worlds industrial structure. As the biggest steel producer Mittal is a good indicator of what the future industrial production would look like. Not good. Also, the equities were pushed even lower by the results of German industrial behemoth Thyssen Krupp AG, which was hurt by the strong Euro and non existent steel demand. 

The IMF is at it again. Ukraine, amid the grave economic situation will hold talks with the IMF bankers on conditions of 16.4 billion dollar loan. IMF bankers will request restructuring of pensions,union and wages. 

In the newly published report by the ECB, the Central Bank warns about the potential deflation, due to the contracted credit in the EU and the US. Business investment and consumer spending to remain non-existent in the foreseeable future, while equity markets enjoy sectoral inflation. Central bankers laugh.

There is a recent development in Hungary. Amid the worst crisis in the modern history, Hungary accepted a 5 billion euros bail out by the ECB. They warn about the severity of the economy, fearing another Iceland. While the general look was pointed towards the Baltic States, especially Lithuania, the condition further deteriorated in Hungary, putting into danger Austrian,Italian and German banks which hold high exposure to the region.

The future of British banking behemoth Northern Rock is to be decided by Euro bureaucrats. The nationalized British bank will know its future one of these days, after the EU votes on the proposal of breaking the bank into two parts and the selling them to naive PE firms or even more idiotic banks. UK taxpayers probably never to see a dime of the purchasing price.

Here are some other important headlines and articles:

• IMF officials meet in Ukraine to discuss wages and pensions ( Bloomberg )
• Polish Central Bank may leave rates unchanged for fourth straight month (Bloomberg)
• European, Asian stock retreat ( Bloomberg )
• The future of UK banks ( Guardian live blog )
• Deflation fears as UK and US credit contracts ( Telegraph ) 
• Dollar hegemony for another century ( Telegraph )
• UK likely to be in the shitter for quite some time ( Guardian )
• FSA tells providers to compensate investors with LEH backed structured products ( (Telegraph )
• McDonald's leaves Iceland,98% decline in obesity ( Telegraph )
• UK to break Northern Rock, Lloyds and RBS ( The Independent )
• BP profits crush expectations ( The Independent )

Those were today's most important news headlines from Europe. Keep your eye on the further development in Northern Rock, RBS and Lloyds, and the IMF situation with Ukraine. Given the historical background and a strong socialist mentality, something tells me that the Unions will most likely refuse to follow IMF advice. This could pressure Ukraine even more to subordinate itself to Russian interest. Also, keep your eye on the development in Hungary and Austria, because that might be the first domino to fall. Given the recent positive results of Swedish banks, and their exposure to the Baltic Region, we can fairly say that the situation in that region is improving, and that the imminent threat of collapse has been shaken off. Thank you for reading.

Comments

[Kelly]

testing 123 Is this thing on?

[Jendrzejczyk]

Mr. B.

I believe you have just become an anonymous celebrity. What a curious oxymoron/situation/curse(?).

[Sqworl]

Cheeky: how many languages do you speak? 

[defender]

No kidding, just when you think a guy can't get any more amazing.

Also, Sqworl, I miss your old avatar, it was my favorite on the site.

[heatbarrier]

Five is my guess, not counting ancient languages. Docendo discimus.

[Anonymous]

Great Iceland article.

What can I expect a U.S. dollar to be worth in Iceland now? ie: what would it cost to visit for the average tourist, in general terms?

[Gimp]

Great stuff cheeky. I have family in the UK and they told me that food prices in the retail stores are up over 24% in the past twelve months. The big ticket items may be showing signs of deflation such as housing but daily necessities have been steadily rising.

[Dr Horace Manure]

Dear Mr. Bastard, thanks to you and the usual cast of characters here at ZH for giving me the education of a lifetime.

CAUTION: Zero Hedge is addicting!

For anyone new to ZH, if you're not a financial professional, you'll be required to study and research quite a bit just to keep up with what the folks at ZH are talking about.

But the reward is more than you can imagine.  I can't start or end my day without it. 

[Anonymous]

If you think US banks are bad; check the European:

“The Financial Crisis: Wall Street Invented The Game, But The Players Were Europeans.”

"Bank of International Settlements has released a new report on what led to the financial crisis and the coordinated international respons. According to the report the crisis was initially caused by large european banks that went on a buying spree with borrowed low priced dollars."

Just look at the 3 figures in this piece. (link below).

1. Realized and Expected Writedowns or Loss Provisions for Banks by Region.

2. Bank Capital Needs

3. Bank Lending Capacity Growth

(text is in Norwegian, but doesn’t matter)
http://www.grunder.no/naringsliv/20091001/har-noen-lest-imf-rapporten/

Related:

http://www.euractiv.com/en/financial-services/eu-crackdown-big-banks-sta...

http://www.bloomberg.com/apps/news?pid=20601095&sid=aimtDkN2KWKI

http://www.ft.com/cms/s/0/e048365a-c3a2-11de-a290-00144feab49a.html

http://www.rgemonitor.com/708?cluster_id=7733

[Anonymous]

Good stuff CB. These updates will be a great addition to ZH. Danke!

[Anonymous]

You forgot Romania: they need 3.5 Bil from IMF otherwise they cannot make salaries by the end of the year.

[Anonymous]

I want to be like a central banker? I'll give warnings of huggings and squeezings while I sharpen my knives.

Hephasteus

[Comrade de Chaos]

and more on world wide GDP

http://www.economist.com/markets/indicators/displaystory.cfm?story_id=14...

[Prophet of Wise]

Much thanks Sir CB of Zh

EU funding 'Orwellian' artificial intelligence plan to monitor public for "abnormal behaviour."

http://www.telegraph.co.uk/news/uknews/6210255/EU-funding-Orwellian-artificial-intelligence-plan-to-monitor-public-for-abnormal-behaviour.html

The great supra-national union in Europe, even now shaping up to revive the last Holy Roman Babylonian Empire

[R.A.G.]

And one to add to that:

Big Brother Britain: £380 a MINUTE spent on tracking your every click online James Slack                 Daily Mail                21 October 2009

An astonishing £380 a minute will be spent on surveillance in a massive expansion of the Big Brother state.

The £200million-a-year sum will give officials access to details of every internet click made by every citizen - on top of the email and telephone records already available.

It is a 1,700 per cent increase on the cost of the current surveillance regime.

Last night LibDem home affairs spokesman Chris Huhne described the sum as 'eye-watering'.

'There is already enough concern at the level of Government snooping,' he said.

'In an era of tough spending choices, it cannot be a justified response to the problems we face as a country to lavish millions of pounds a year on state spying.

'The increase in money spent on tapping phones and emails is all the more baffling when Britain is still one of the few countries not to allow intercept evidence in court, even in terrorist cases.'

State bodies including councils are already making one request every minute to spy on the phone records and email accounts of members of the public.

The number of snooping missions carried out by police, town halls and other government departments has rocketed by 44 per cent in two years to a rate of 1,381 new cases every day.

Ministers say the five-year cost of the existing regime is £55.61million, an average of £11million a year.

This is paid to phone companies and service providers to meet the cost of keeping and providing private information about customers.

The cost of the new system emerged in a series of Parliamentary answers.

It is to cover payments to internet service providers so they can store mountains of information about every customer for a minimum of 12 months, and set up new systems to cope.

The actual content of calls and emails is not be kept - only who they were from or to, when they took place and where they were sent from.

Police, security services and other public authorities can then request access to the data as part of investigations.

Some 653 bodies are currently allowed access, including councils, the Financial Services Authority, the Ambulance Service and fire authorities and prison governors.

The new rules allowing access to internet records will be introduced by Parliament before the end of the year.

They are known as the Intercept Modernisation Programme.

Ministers had originally wanted to store the information on a massive Government-run database, but chose not to because of privacy concerns.

Yesterday Alex Deane, director of campaign group Big Brother Watch, said: 'The Government is preparing to make British people pay through the nose so that they can track our movements online.'

But a Home Office spokesman said the costs involved were entirely separate from those necessary to comply with the European Data Retention Directive, which requires the storage of phone and email records.

'Communications data is crucial to the fight against crime and keeping people safe,' he added.

'We have made clear that there are no plans to collect and hold the content of everyone's communications.'

There were 504,073 made last year to intercept email and telephone records under the Regulation of Investigatory Powers Act. It was passed ostensibly to fight terrorism.

But it has been used to spy on people suspected of putting their bins out on the wrong day, dropping litter and attempting to cheat school catchment area rules.

http://www.dailymail.co.uk/news/article-1221839/State-spying-cost-200m-y...

[Comrade de Chaos]

Nice.

Cheaky, any info on EU based RE & bank loans defalut rates or potential deflation?

"The euro area recorded a trade deficit of €4 billion ($5.7 billion) in August, following a €12.3 billion surplus in July. Exports plunged by 5.8% in August, more than offsetting the 4.7% rise in July. The output of construction firms in the currency zone fell by 0.4% in August, the fourth straight monthly decline. That left output 11.3% lower than a year earlier."

-Economist (not that I am reading it...went in my ranking from # 1 to that below of the NYT in the last 7 years...)

[walküre]

Told ya. The USD is not the ugliest bride of the fiatscos.

USD is god awful ugly but has the biggest bazookas under her dress.

Keep that in mind when shorting the Dollar.

Euro exposure is grim.

[Miles Kendig]

Thanks CB.  I do enjoy a good read on regional essentials.

If you would be so kind.  What do you see as the effects of the developing situations in Hungary & Ukraine on what I view as the next implosion in waiting, Bulgaria?

All The Best on future endeavors that contribute to further understanding...

[Anonymous]

http://ronbosoldier.blogspot.com/2009/10/iran-attack-plan-confirmed-by-r...

how about this cheeky? iran attack immanent. if i was a stock market trader, i might be interested in hearing this rumor because it is quite possible.

[Oso]

wait, why is it safe to say the situation in the baltics is improving? because of what the swedish banks have said...??? hahahahahahaha

[Leo Kolivakis]

CB,

Don't forget Latvia is cratering and will likely devalue its currency.

[heatbarrier]

Outstanding, CB.

I think the ball sits with the EU at this point.

The Great Depression second leg down started in May 1931 with a banking crisis in Austria. The EU financial system is my main concern right now.

Heat

[ReallySparky]

Cheeky, I always enjoy your comments and am quite a fan.  So humble too. "Thank you for reading."  Darlin it is our pleasure.  Can a woman love a man she has never met?

[Miyagi_san]

More Bastard from across the pond...whats your time zone for those late night rumors (RBS) 

[Grifter]

Thank you, Mr. Bastard, for introducing this column.  As a couple people have noted, it will be nice to have additional perspective from outside the US with this addition to ZH.  Best wishes on what I hope will be a long-lived run.

[aldousd]

"Mr. Bastard" Nice! I like it.

[Anonymous]

+1

[aldousd]

Nice Cheeky!  98% drop in obesity! That's great news! I can see next weeks headlines: "Iceland: Stocks rise on Health Improvement Outlook, Lower Insurance Premiums, IMF Loan Repayment."

[deadhead]

Cheeky:

Fantastic...very well done.  I find the European update MOST helpful and critically important.  Thank you for taking the time and please keep the info coming.

I haven't seen anything about eastern europe and the GE mess of late and hope you will have commentary on this matter soon.

[trx]

Central Bank of Norway becomes the first European bank to reverse easing; lift interest rate by 25 bps.

http://www.norges-bank.no/templates/article____75659.aspx

The NOK is getting stronger, as stocks at OSE falls, market volatility on the rise.

http://www.grunder.no/pris_og_rente/20091028/kronekursen-styrkes/

[Steak]

Jan Wolfhouse: And heres something else you forgot to factor in - were not that drunk.

Pim Scutney: Did you hear that everybody? They said they're not that drunk! Cheeky bastards!

Crowd: [shouting along] They're not that drunk! They're not that drunk! They're not that drunk!

[Cognitive Dissonance]

You mean there is more to this world than the Banana Republic of the United States of Amerika?

Thanks Cheeky for pulling my head out of my lint filled belly button and proving to me that the world begins, not ends, at the shores of Americka.

[Anonymous]

Thanks Cheeky.

[crosey]

Thanks loads Cheeky!  You and Andy Xie (Asia) make the global perspective complete.

Very much looking forward to your posts.

[Anonymous]

Cheeky, good post. Keep an eye on Ireland's "National Asset Management Agency" (NAMA), essentially a "bad bank" to bailout Ireland's banks that acted outrageously over the last 10 years. NAMA will pay 54bn Euro for 77bn worth of retarded loans. ECB giving the green light for this.

[Artful_Dodger]

Greetings from Strasbourg...capital of functionnaire paper shuffling.

Business is bad here, although not as bad as in other French cities where the EU Commission is not resident. Property prices are slipping as a deflationary mindset is taking hold. Noone really wants to take on credit, especially within the private sector...they don't seem to get the 'perks' (lower mortgage rates and salaries rising with inflation) as the public sector.

It will take some bloody rupture to get this country thinking right...release the entrepreneurs and lower their debilitating social costs...

Sacre bleu I nearly dropped my croissant into my coffee!

Artful.

[Anonymous]

Cheekie!!!

Welcome to the daily writing grind. I know your stuff will rock.

[Anonymous]

Cheeky, you are our Zero Hedge version of the bat swinging Youtube guy. Keep up the Euro vision posts...we need them.

[Sqworl]

Thank you Cheeky!!!

[tallystick]

Daily Cheeky updates?!?  Bravo!

[Anonymous]

Ace! Thanks so much Cheeky.

Other news might include the top of the Primera División table:

Barcelona 22
Real Madrid 19
Sevilla 16
Valencia 15

Més que un club!

[Cheeky Bastard]

ajajajajajajajaja

Hala Madrid, me gusta ver a Messi jugar, pero soy un Madridista !!!!

Madrid numero 1 

im just kidding man .....pero, si, Mes que un club. Mucha suerte en el campeonato !!!

[Anonymous]

(upside down question mark)Donde Betis?

[tip e. canoe]

"Also, keep your eye on the development in Hungary and Austria, because that might be the first domino to fall."

wouldn't be the 1st time...what is it with that part of the world cheeky?...strange how it seems to always be the straw that broke the camel's back

[Cheeky Bastard]

I don't know man, must be the mentality or something.

I also believe that they haven't changed the socialist picture which was painted for almost half o century and that the nanny state, with high social giving will get to them, sooner or later. And all i can say about the Austrians is that they were just greedy fucks  and didn't perform the necessary due diligence.

[Anonymous]

Cheeky... Thanks for the Euro/Mid East perspective at
ZH and for doing the heavy lifting to make this a
regular posting. Geo-political problems, in concert with
the financial stability of Euro-rim countries, are quite
desperate. Since the near monetary collapse of several
of these countries in February who were "saved" by the
IMF, these issues went back burner but I knew there was way too much toxic crap to hold down for too long. Until now...

We need a current review of what the Swiss, British,
Austrian, German, Swedish and Finnish banks are in
for with regard to their massive financial exposures
to: Ukraine, Hungary, Baltics, Romania, Czech republic
etc. One article cited that Austrian banks themselves
are on the hook for two or three times Austrian GDP
to Ukraine and Hungary alone. Because I know one thing,
once it starts to get cold, money will run tight and somebody is going to have a tough time paying their
Natural gas bills this winter to Vlad the Impaler.

Amazingly, U.S. banks did not to drink much from this Kool-Aid punch bowl. Guess that the ROI and CDS
leverage did not get past 20:1 so, why bother. If
anyone is up to this type of (Excel) country/banking analysis, you could also throw in some other "toast"
while we are going around the Euro-Rim countries and
add Greece and Spain.

[Daedal]

<sarcasm>You're bashing socialism?! For the record, China reported 8.5% GDP growth.</sarcasm>

[Cheeky Bastard]

I plan to have this updated daily, so you guys are updated with the developments in Europe. If for nothing else, then for some global perspective. 

[Anonymous]

Cheeky-Thanks, this is a real service
Ojada

[ElvisDog]

It's nice to know that the European banks are as stupid and screwed-up as the U.S. banks are. And I've never understood why any country accepts an IMF loan. Is it just a matter of payoffs to the political elite in those countries? Because the restrictions that come with IMF loans always hurt the general population.