This page has been archived and commenting is disabled.

What Happens to a Financial System When Its Two Biggest Pillars Collapse?

Phoenix Capital Research's picture




 

 

Those EU leaders who have yet to be implicated in scandals are not faring much better than their more corrupt counterparts. In France, socialist Prime Minister Francois Hollande, has proven yet again that socialism doesn’t work by chasing after the wealthy and trying to grow France’s public sector… when the public sector already accounts for 56% of French employment.

 

France was already suffering from a lack of competitiveness. Now that wealthy businesspeople are fleeing the country (meaning investment will dry up), the economy has begun to positively implode.

 

The first sign of this came actually came from Germany. As we noted a few months ago, Germany had prepared a working group to examine the impact of an economic collapse in France.

 

German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone's second largest economy could come back to haunt Germany and the broader currency bloc.

 

Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the "wise men", to consider drafting a report on what France should do…

 

"The biggest problem at the moment in the euro zone is no longer Greece, Spain or Italy, instead it is France, because it has not undertaken anything in order to truly re-establish its competitiveness, and is even heading in the opposite direction," Feld said on Wednesday.

 

"France needs labour market reforms, it is the country among euro zone countries that works the least each year, so how do you expect any results from that? Things won't work unless more efforts are made."

 

http://uk.reuters.com/article/2012/11/09/uk-germany-france-economy-idUKBRE8A80MN20121109

 

This German concern has proven to be well founded, as the recent spate of French economic data has been truly horrific.

 

Auto sales for 2012 fell 13% from those of 2011. Sales of existing homes outside of Paris fell 20% year over year for the third quarter of 2012. New home sales fell 25%. Even the high-end real estate markets are collapsing with sales for apartments in Paris that cost over €2 million collapsing an incredible 42% in 2012.

 

Since the EU Crisis began in 2008, France and Germany have been the two key countries backstopping the implosion. The fact that France is now facing an economic implosion does not bode well for the future of the Euro or the EU.

 

The other sovereign backdrop for the EU, Germany, is also experiencing an economic slowdown.

 

The German economy was hit hard by the euro zone crisis in the final quarter of last year, shrinking more than at any point in nearly three years as traditionally strong exports and investment slowed, the Statistics Office said on Tuesday…

 

Gross domestic product shrank by 0.5 percent in the final three months of 2012, the worst quarterly performance since Germany fell into a recession during the global financial crisis in 2008/2009 and only the second contraction since it ended.

 

The parlous fourth quarter pushed overall growth for the year down to 0.7 percent, a sharp slowdown from the 3.0 percent registered in 2011 and a post-reunification record of 4.2 percent in 2010. The 2012 figure was a tad below a Reuters consensus forecast for growth of 0.8 percent.

 

http://www.reuters.com/article/2013/01/15/us-germany-gdp-idUSBRE90E09Q20130115

 

Thus, we find that Europe’s primary political market props (EU leaders including ECB head Mario Draghi) are coming unraveled at the precise time that EU banks are showing warning signs and the most important EU economies are heading sharply south.

 

2013 is going to be a very interesting year for Europe.

 

We have produced a FREE Special Report available to all investors titled What Europe’s Collapse Means For You and Your Savings.

This report features ten pages of material outlining our independent analysis real debt situation in Europe (numbers far worse than is publicly admitted), the true nature of the EU banking system, and the systemic risks Europe poses to investors around the world.

It also outlines a number of investments to profit from this; investments that anyone can use to take advantage of the European Debt Crisis.

Best of all, this report is 100% FREE. You can pick up a copy today at:

http://gainspainscapital.com/eu-report/

Best

Phoenix Capital Research

 

 

 

 

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 02/15/2013 - 14:51 | 3247164 fijisailor
fijisailor's picture

"Now that wealthy businesspeople are fleeing the country (meaning investment will dry up), the economy has begun to positively implode."

Now I know.  The only thing that makes an economy function are wealthy investors.

Fri, 02/15/2013 - 14:01 | 3247028 Bicycle Repairman
Bicycle Repairman's picture

“Those EU leaders who have yet to be implicated in scandals are not faring much better than their more corrupt counterparts.”

Scandals do not matter.  They’ll just line up the next guy.

“Now that wealthy businesspeople are fleeing [France], the economy has begun to positively implode.”

Where are they going to run to?  It’s a temporary refuge.  The capitalist economy is imploding. 

“The first sign of this came actually came from Germany”.

Germany is in on the game. 

 “Auto sales for 2012 fell 13% from those of 2011.”

Put the “workers” on welfare.  It’s far cheaper.

 “Even the high-end real estate markets are collapsing”

LOL.  They’re leaving anyway.

“Since the EU Crisis began in 2008, France and Germany have been the two key countries backstopping the implosion.”

The FED is backstopping the “implosion”.  France and Germany are client states of the empire and they’ll do as they’re told.  

“2013 is going to be a very interesting year for Europe.”

If you are into melodrama.

“We have produced a FREE Special Report available to all investors”

No doubt your report contains trenchant analysis, but the world you are analyzing doesn’t exist.

 

Fri, 02/15/2013 - 13:54 | 3246995 WTF_247
WTF_247's picture

all you have to know:

 

big banks control algos, fed and equivalent worldwide handing them money, algos are almost always on "buy" mode, especially BTFD.  Until they get the signal to GTFO they are gonna keep doing the same thing:  Bad news = buy, good news = buy more.  When the only source of perceived risk is removed there is no reason to really sell.  The impression is that the fed will step into the markets whenever necessary to prop them up.  You also have an inflation play going on (imo) - stealth of course - which will expand PE ratios.

Of course this will not end well but that is irrelevant. If you know that the Fed will bail you out you do not care about the ending, just about getting your bonuses now.

Fri, 02/15/2013 - 13:45 | 3246952 marathonman
marathonman's picture

Europe, blah, blah, implosion, blah, blah, blah.  Grexit, blah, blah, blah.  ECB, Draghi, Germany, Spain, Italy, France, blah, blah.  This thing should have cratered long ago, but it has levitated and morphed and strengthened its death grip on all the Euro countries.  I am not expecting the vampire squid to give up.  They will ignite the next war to keep debt expanding by hook or by crook.  Dissolution, blah, blah, blah.

Fri, 02/15/2013 - 13:35 | 3246906 The Trade Group
The Trade Group's picture

another useless article.. Why don't you give a time frame for your predictions? Oh.. you tried that and made a fool of yourself..

Fri, 02/15/2013 - 13:21 | 3246844 Ying-Yang
Ying-Yang's picture

"2013 is going to be a very interesting year for Europe."

Really?

Fri, 02/15/2013 - 13:23 | 3246859 DOT
DOT's picture

'just a matter of time.'

Do NOT follow this link or you will be banned from the site!