Guest Post: Europe Is Not "Fixed": Two Charts

Tyler Durden's picture


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The Eurozone is not a debt crisis that is "fixed," it is a debt crisis waiting to implode.

The happy-talk that the Eurozone debt crisis has been resolved is ubiquitous. But when did ubiquitous happy-talk make it correct? Since the crisis is about debt--too much of it, and too much of it cannot and will not be paid back--then perhaps it would be prudent to look at two charts of eurozone credit, courtesy of the insightful chart-based website Market Daily Briefing.

Here is total Eurozone credit since the inception of the euro. This is roughly equivalent to TCMDO (Total Credit Market Debt Owed) in the U.S.

Notice that total credit owed has nearly tripled since the introduction of the euro in 1999, and that it continued to expand robustly after a brief pause in the global financial crisis of late 2008-early 2009. Recently, its expansion has flattened, but there is essentially no evidence that credit has declined, i.e. deleveraging.

Next up: Eurozone credit growth. Recall that debt-based, consumption-based economies like Europe, the U.S., China, Japan, et al. cannot expand without credit growth. Thus any decline of credit growth spells deflation:

This is not a debt crisis that is "fixed," this is a debt crisis waiting to implode. Total credit owed is still sky-high--only a trivial percentage of the debt has been written down or renounced.

Meanwhile, the credit growth needed to drive expanding consumption has literally fallen into the abyss.

This is the worst of all possible worlds in a debt-dependent economy: a massive overhang of impaired debt and a collapse in credit growth.

The only thing that's been "fixed" is the mainstream media's perception management propaganda. So is perception all there is to reality? The next six months should provide an answer.

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Wed, 02/13/2013 - 10:54 | 3240184 Shizzmoney
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Oh, and half of the youth population is unemployed.

But who need jobs? Wealth? European millionaires and billionaires are doing better than ever, and accordign to central banks - that is ALL THAT MATTERS.

Wed, 02/13/2013 - 10:58 | 3240191 LawsofPhysics
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Unemployed my ass.  There is more than one "market" in the euro-zone now.  I will be in France in July, need to confirm the rumors myself then.

The tighter the banking/financial overlords squeeze the more people slip through their grasp.  Fuck the motherfucking paper-pushers.

Wed, 02/13/2013 - 11:03 | 3240209 Inthemix96
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On the other hand laws,

A mate of mine has been out of work for nearly 12 months and has applied for a shit load of work, he just cant get one.  In one case he reckons more than 200 folk applied for the job he did, and hes a sparky an all part P registered the lot, just not much going out there and getting worse.

Oh and its fucking snowing again, I fucking hate snow me.

Wed, 02/13/2013 - 11:43 | 3240312 TahoeBilly2012
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Snow is great when you have skis on, otherwise, not so much.

Wed, 02/13/2013 - 12:10 | 3240371 Shizzmoney
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Here in the United States, I submitted 3000+ resumes over the course of 2 years before I got a (shitty) job.

A Croatian girl I used to bang, a engineer with a PhD, can't even find work. AN ENGINEER.

Shit's bad, man.

Wed, 02/13/2013 - 13:01 | 3240482 ElvisDog
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Companies don't hire based on resumes. Most of the time the request for resumes is a formality and they go straight to the garbage can. Most good jobs are found via personal contacts - knowing somone who already works in the company. Of course, that doesn't help young people fresh out of school much.

Wed, 02/13/2013 - 13:13 | 3240510 Tango in the Blight
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She has a PhD so maybe she can help Uncle Ben with engineering economic growth through the printing press. /sarc

Wed, 02/13/2013 - 10:58 | 3240192 LongSoupLine
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Those charts are just flat out fucking time bomb scary.  That's it, I'm buying more fucking silver.

Wed, 02/13/2013 - 11:22 | 3240265 natronic
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That's what i'm doing.  I'm keeping my same ratty vehicle.  Not buying anything I don't have to and collecting silver, and a few weapons :-)

Wed, 02/13/2013 - 10:59 | 3240198 Dr. Engali
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Can you spare 56 trillion dimes brother?

Wed, 02/13/2013 - 11:14 | 3240247 Sudden Debt
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sorry... I only have 2,5 trillion 1964 silver dimes...

Wed, 02/13/2013 - 11:05 | 3240216 falak pema
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CHS does not understand the new, NEW credo of NWO capitalism : Fiat Debt is ASSET.

And it works for both the private and public sector oligarchs! 

Everybody on board this titanic fiat juggernaut. 

Its now a battle between holders of fiat Assets in the form of CB notes OR in the form of private bank CDS/interest arbitrage/currency arbitrage paper on mega shitpiled OTC deals. 

The 64000 $ question is : whose assets are more witches' brew or true holy grail nectarine...eeny meenie miny moe! 

The chalice from the palace has the brew which is true! RIGHT???

Le bouffon du roi (1955) - Memorable quotes

Wed, 02/13/2013 - 11:05 | 3240217 praps
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Likewise US Treasuries yield rising.  Nobody wants debt any more.  Buyers strike.

Wed, 02/13/2013 - 11:08 | 3240223 Cdad
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Greece is fixed again.  Everything is fine.  Relax everyone.  Have faith.  The bankers are here to help.

Wed, 02/13/2013 - 11:10 | 3240233 Sudden Debt
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Wed, 02/13/2013 - 11:14 | 3240245 GetZeeGold
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Just a question....has Europe tried solar panels?

Wed, 02/13/2013 - 11:45 | 3240318 Ratscam
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germany is energy self sufficient even after they turned off the atomic reactors. Enough energy during peak hours with no wind and sun is a problem. easy to solve with gas generators.

Wed, 02/13/2013 - 12:33 | 3240413 Svendblaaskaeg
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German Energy Agency Chief 'We'll Need Conventional Power Plants until 2050'
SPIEGEL ONLINE - November 15, 2012


Wed, 02/13/2013 - 12:58 | 3240473 Ratscam
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sorry i forgot the word not enough energy during peak hours and no storage possibilities when the sun is shining or wind is blowing during non peak hours.
storage is key and peak is key, hence we still need gas or atomic, but i guess not as long as 2050, unless the atomic lobby lobbies as strong as they have so far, not solving the storage and peak electricity problems.

Wed, 02/13/2013 - 13:17 | 3240516 walküre
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Have they figured out how to send the power from the offshore windparks into the grid yet? Last I heard was they built all those fancy windparks in the open ocean but didn't connect them via cable to the grid. I found that hard to believe but maybe you can shed some light on it.

FYI shutting down all nuclear power was the dumbest thing Fräulein Merkelchen ever did. She did many stupid things but that took the prize. She's a total moron.

Wed, 02/13/2013 - 14:22 | 3240658 Svendblaaskaeg
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No its not easy to be green - without the use of Norway's pumped storage we would have the same problems in Denmark and not so many wind farms

Here a good visual of the problems with fluactuating energy in Germany:

Fluctuating Output, Wind and Solar, May 25 and 26, 2012:

Spiegel, Energy topic:


Wed, 02/13/2013 - 14:11 | 3240638 piliage
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Sure...right. And they imported 32 million tonnes of coal in 2012 why, just for pleasure?



Wed, 02/13/2013 - 14:32 | 3240696 Svendblaaskaeg
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"..And they imported 32 million tonnes of coal.."

Yes, but..but they will burn the coal in very green coal power plants ;-)

A New Role for Coal in German Energy Revolution
SPIEGEL ONLINE - September 07, 2012

Wed, 02/13/2013 - 11:17 | 3240252 MFLTucson
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Europe Is Not "Fixed"... and the US is?

Wed, 02/13/2013 - 16:08 | 3240978 TPTB_r_TBTF
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Yes, the markets in the US are fixed. 

They are fixed every day at 3 pm.

Wed, 02/13/2013 - 11:28 | 3240284 skistroni
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I deleveraged by 25% in my company last year. I tell you, it feels like shit.

Wed, 02/13/2013 - 13:20 | 3240521 walküre
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I feel your pain. Go underground. That's my recommendation to friends in Germany. Black market is thriving.

Wed, 02/13/2013 - 11:56 | 3240347 SheepDog-One
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Everyone just marching in place, kicking the can yet another 24 hours....for what....I'm not sure I even want to know.

Wed, 02/13/2013 - 13:18 | 3240518 walküre
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24 hours can kicking ... to live to see another day.

We haven't evolved past being day laborers except for a few blips on the long line of human evolution.

Wed, 02/13/2013 - 14:07 | 3240628 orangegeek
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"... consumption-based economies like Europe, the U.S., China, Japan, et al. cannot expand without credit growth. Thus any decline of credit growth spells deflation. ..."


Ahh, deflation.  And it's going to hurt real bad too.

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