This page has been archived and commenting is disabled.
Three Gaping Holes In the EU "Recovery" Story That Could Cost Investors Millions
The whole “recovery” in Europe never made much sense to us.
We are told repeatedly that Europe has passed through the storm, that the EU economy and financial system are on the mend, and that Europe is now the place to be investing.
However, the fact of the matter is that economic data can be fudged for political reasons (e.g. Angela Merkel’s re-election bid in Germany), riots/ protests can be ignored or marginalized by the media, and the real state of bank balance sheets can be hidden as long as you avoid major margin calls or funding stressors.
Indeed, considering that Europe’s problems took years to unfold, despite the clear evidence that its banking system was virtually insolvent, the fact that things appear calm in Europe today doesn’t really say much about the true state of affairs over there.
So what truly has improved in Europe?
Bonds yields have fallen… but when you’ve got sovereign governments (via social security funds), the ECB, and bank of international settlements all buying your bonds… odds are they’ll fall in yield.
What about corporate earnings and revenues? Well if you are comparing your results to 2012 when the entire EU banking system almost imploded, chances are they’ll look pretty good. If you compare your physique to a dead guy, you’ll look healthy no matter how out of shape you are.
And then of course there are European stocks, which have been roaring higher ever since ECB President Mario Draghi stated he would do “whatever it takes” to keep the EU financial system afloat (somehow this claim is more relevant than the actual monetary or banking laws of the EU).
Indeed, EU financials have not only more than doubled since the dark days of 2012… they’ve in fact exceeded their pre-crisis 2011 highs!
But then again, when your Central Bank gives banks access to unlimited capital in exchange for totally garbage collateral priced at 100 cents on the Euro (despite it being worth at most half of that), you’re likely going to see a lot of liquidity move into stocks.
At the end of the day, all of the data points used to claim that things have improved are largely accounting gimmicks. The people claiming that all is well are the same folks who denied there was a problem to begin with… and who, not coincidentally, draw the vast majority of their political and social capital from perpetuating this claim.
So here are some rather staggering data points Europe needs to confront before stating “all clear.”
- As of 2012, an incredible 25% of the total EU population (120 MILLION people) was living in poverty or social exclusion (the number has since increased by four million more… so much for things improving).
- In 2011, child poverty in Spain was an incredible 30%. That was before things got ugly in 2012.
- Youth unemployment in Europe is an amazing 22% with troubled countries like Spain and Greece showing levels more than twice that.
The solution to these problems? Continue to claim that the crisis is over… and put into place various schemes to steal citizens’ money if things get worse again (Cyprus snatched over 40% of all deposits over €100,000 during its recent banking issues).
When you are actively promoting plans to snatch deposits to prop your banking system up (see the recent IMF proposal), you are not in “recovery.”
We don’t know if things will erupt tomorrow, next week or next year. But we do know that the “recovery” is largely a work of fiction… and that the crisis will erupt again at some point.
Swing by www.gainspainscapital.com for a number of FREE investment reports including Protect Your Portfolio, How to Buy Gold at $273 per Ounce, and What Europe’s Crisis Means For You and Your Savings.
Best Regards
Phoenix Capital Research
- advertisements -
Am looking forward to seeing the Nazi rent-a-mob turning up outside the European Parliament one they realise that their efforts in the Ukraine were a waste of time.
"Bonds yields have fallen… but when you’ve got sovereign governments (via social security funds), the ECB, and bank of international settlements all buying your bonds… odds are they’ll fall in yield."
So you are telling other countries (continents) do the same thing as the US? Tell me it ain't true. FML!
Blah Blah Blah. Then more Blah Blah Blah Blah.
Getting it yet..? Selling Doom and Gloom for the last FIVE years.
Graham summers is the Ulitmate scumbag...
Oh yeah, he took his fucking name off the blog...Scum
For the millions who have lost their jobs and have little hope or opportunity of further employment, for those who have lost their saving ( partially or totally) or their homes, for those who are employed or pensioned and seen their imcome reduced over the years the doom and gloom is already here. GET IT !
To be fair, his analysis is correct, he just made the same mistake Nigel Farage did.
He, (as well as myself and many others) drastically underestimated the fanaticism that EU "officials" would employ to save the euro.
Forget millions or investors. Tell me more about those three big gaping holes.
LoL
Millions mean nothing anymore
Please re boot your bs line of poop
It's fooked, Mate; just tutally fooked.
Why do I think of a horse brought upstairs in an apartment building?
Maybe because you've seen "Animal House" (dead horse in Dean Wormer's office)
don't seperate the money thread from the geopolitical causes.
The banksta money line dies when the Pax Americana hold on reserve becomes untenable.
Some ZHers deride Graham's work posted on ZH - as with all contrarians the timing can't be pinpointed but his comments are always, as far as I'm concerned, pertinent.
DavidC
A social disaster scenery for neoliberal Europe
Signs of growing inequality between classes and countries
http://failedevolution.blogspot.gr/2014/04/a-social-disaster-scenery-for...