Guest Post: Why Europe Is Still In Peril, In Two Charts

Tyler Durden's picture

Submitted by John Aziz of Azizonomics blog,

A lot of analysts, including myself, have given the European situation a rest since last year. There were certainly some signs that the ECB and IMF had slowed (if not stopped) the deterioration by providing liquidity backstops to the addled banking system. But perhaps that was just the calm before the storm.

In truth, things were still probably just as perilous as ever up until yesterday when the ECB and IMF decided to start a banking panic by enforcing a haircut of up to 10% on bank depositors. That was literally the stupidest thing that anyone has done since the Euro crisis began, and while it may not lead to utter disaster, there is a significant chance that it will. Not only is it excruciatingly unjust (it’s theft!), it is also incredibly suicidal. Many, many Spaniards, Italians, Greeks and Portuguese will have looked at the Cyprus haircut in horror, and wondered “Am I next?” Some of those will withdraw their money from the bank and stuff it in a mattress or into tangible assets, furthering stressing the already-fragile and highly-leveraged European banking system.

The background to this is soaring European unemployment:


The people running the European financial system and engineering the bailouts and austerity (ECB, EU, IMF, Germany) have ploughed on through with more and deeper austerity even as European countries (other, of course, than Germany) have run up to higher and higher unemployment levels. Spain and Greece are above 25%. Italy is above 10%, and Portugal above 15%. Hiking taxes and cutting spending is leading to more and more people in unemployment oblivion. That isn’t healthy. Let’s not forget what happened to Germany the last time when over 25% of its people found themselves unemployed:


If bank runs materialise across Europe next week, the unemployment situation is most likely to worsen even further. If that happens, expect more and more unemployed, underemployed and angry Europeans to start voting for increasingly radical political parties. This is suicidal. Europe needs to not only reverse the awful, stupid Cypriot haircut, but also to put fiscal consolidation on hold (it has, lest we forget, so far been counterproductive) and start worrying about unemployment levels.

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sitenine's picture

Pfft! Like we need charts to know that Europe is still in peril?


toys for tits's picture



As one person tweeted:

Bank deposits: 10 birds on a branch. You shoot one. How many are left? Nine? Wrong! ANSWER: NONE.

EscapeKey's picture

You have 10 keynesian economists on a branch. you shoot one. how many are left? Nine? Wrong! ANSWER: ELEVEN, because now all the economists know it will never happen again!!!eleventyone11

DJ Happy Ending's picture

It is a big horse meat sandwich and they're all gonna have to take a bite.

zorba THE GREEK's picture

Unemployment = empty stomachs = civil uprising.

williambanzai7's picture

I no longer have any reservations about pulling every Visual Combat stop on Merkel and her Freak Show entourage.

otto skorzeny's picture

her ties to the Stasi(and theirs to KGB/Putin) speak volumes

machineh's picture

Don't forget to repost the 'Scary Euro Clowns' poster ... one of your all-time classics.

Yen Cross's picture

     Git-er-done Billy-7.  I'm behind ya 110%.

EscapeKey's picture

Unemployment? B-b-but the stock markets say everything is just grand.

sitenine's picture

Don't believe everything you're told to hear.

Joebloinvestor's picture

If bank runs don't occur, every European deserves the shit they are stuck with.

The first "shot across the bow" at any european who is/was dumb enough to believe these FUCKING LIARS and have money in the bank.

squid virtuous's picture

Exactly - cue Italy & Spain ATM cams... what time is first light over there, this should be good.

Silver Garbage Man's picture

Agreed, any who hasn't bailed by now gets what they deserve.

Miffed Microbiologist's picture

Some people learn from wise people lecturing. Some people learn from wise people in the present and past by reading books. And then there are some who just have to pee on the electric fence to figure it all out. Unfortunately there are many in the last case.


otto skorzeny's picture

in a way i think the MSM ignoring this Cyprus deal has its good points because it just allows more preparation time for those that are aware-he who panics first panics best

NoDebt's picture

Not on this one, Otto.  CNBC's got 4 articles up in the last handfull of hours.  One by no less than El Erian of PIMCO.

This is the time to distingush between what matters and what doesn't.  This one matters.  Even the MSM can't ignore it.

Oh, I'm sorry, is CNBC not considered "mainstream media"?  If you're referring to ABC, NBC, CBS, etc.... I have no idea.  I haven't watched them since shows like Cheers went off the air.


LawsofPhysics's picture

Never let a crisis go to waste.  Don't worry, those "who's your cleanest dirty shirt" hucksters at PIMPCO will milk this baby!

The Miser's picture

I have not watched since they took off Charlie's Angels.   Oops. I foregot, it was Baywatch.

Peter Pan's picture

One way or another unemployment levels will worsen as a result of austerity measures putting pressure on spending which in turn affects jobs and which in turn affects people's abilitiy to service debt.

The downward spiral will continue until debt write-offs as opposed to cash grabs are put into effect. It will cntinue for as long valuable resources are directed to the public sector for unproductive purposes.

EscapeKey's picture

oh that's definitely coming, but i would expect it to start with pension funds - along the lines of (private, of course) pension funds are required to hold at least 50% QUALITY long maturity (say) British guilts.

Whoa Dammit's picture

""...expect more and more unemployed, underemployed and angry Europeans to start voting for increasingly radical political parties. This is suicidal."

Why is it suicidal, because the current political parties have done so much for (to) their people???

olto's picture


Are you any happier being robbed by QE to Infinity? I think not. I came across this today:

"Back in 1941, with the memory of the Great Depression still weighing heavy, an American wrote into the Federal Reserve with an idea. “Would it not be feasible,” the member of the public asked, “to impose a Federal tax on the deposit of funds in bank checking accounts?”

The reply from the Fed was polite but succinct: while there’s no doubt a tax on bank deposits would have “the advantage of administrative simplicity”, it is “not in accord with one of the fundamental principles of taxation in a democracy, namely, that taxes should be imposed in accordance with ability to pay”."

From an article by Ed Conway.

I had never heard this story before, though, I had always assumed that it was a principle in our US form of democracy----a sort of 'yankee' noblesse oblige. However, I doubt very much if it is still in the 'ethics playbook' of today.
This Cypriotic Panic is the most interesting news in a long time from the humans-----
Maybe it is just more theater-----we will soon find out

JustObserving's picture

US unemployment is equally bad if not worse than the EU.

U3 may be 7.7% but U6 is 14.3% and Shadowstats is 23%. EU27 unemployment is 10.7% per your graph.  

So all this attention to European unemployment is a red herring to divert attention from problems at home.

So next time, save your  perilous warnings for more substantial and reliable data.

EscapeKey's picture

I would expect labour force participation in Europe to be below that of the US, given a pretty poor demographics in especially the Mediterranean countries.

DoChenRollingBearing's picture

That would be my GUESS as well.  We are Americans who go to Europe maybe two times every three years as tourists.  France and Italy do not have the "feel" or energy of the USA IMO.

And if we doctor our figures (pretty much beyond dispute), they do too.

earleflorida's picture

God Bless You... Julian Assange !

frenchie's picture

so basically AH provided a great recovery to the Reich

GreatUncle's picture

MONKEYS. No political monkey globally is prepared to discuss the true unemployment level in monkey society.

The flaw in monkeykind comes home to roost magnificently, where millennia ago, monkeys climbed out of trees and scratching around with a branch "just" managed to gather enough food to feed themselves and no other bloody monkey. Now up pops the banker / political monkey, "if I get others to do all the work I can eat for free". Nice job if you can get it. Well up to this point they managed ... provided it ain't too many. No monkey considered teacher, doctor, lawyer and accountant monkeys did they and a few other categories.

Now being very intelligent clever little monkeys, they developed mechanization and could produce enough for 10x the population. Only thing was they did not have 10x the population to consume it all, but with those other categories added you could be alright up to a point. If we had benefit monkeys, they consume too so they carried on adding benefit monkey now. (The link to energy is through this part)

The monkeys could not stop increasing their efficiency though,so it gets higher,much higher to 20x, 50x, 100x. From here on in it gets ugly because some monkeys cannot do anything. At such high production levels you would collapse monkey markets through oversupply even a single mega 1x10^6x monkey started production.

That point was reached a long time ago and since then it just gets steadily worse. The thing is there is no solution to that monkey puzzle only for monkey societies to accept 10% and potentially many more will be unemployed forever. Can't even kill half the monkeys the efficiency is a % of the population and you do not help the consumption needed in the process.

Try unravellng all the efficiencies backwards until you hit a level where you just manage to obtain enough to exist with no frills but WHAT YOU GOING TO DO ABOUT THE ENORMOUS MONKEY DEBT of banana IOU's you created on the way? 

The political (won't call them wise) monkeys only response under such circumstances can be ... see, hear and think no unemployed. Great idea ... don't mention anything about monkeys :-) and especially unemployed ones.

 Who the f%^k needs monkey when we got robots.

olto's picture

Great Uncle,

 Best post of the day------thanks

michael_engineer's picture

"The people running the European financial system and engineering the bailouts and austerity (ECB, EU, IMF, Germany) have ploughed on through with more and deeper austerity even as European countries (other, of course, than Germany) have run up to higher and higher unemployment levels"

Seems like there is going to be austerity no matter WTF is done. It just gets packaged in different ways in different places. And the trend isn't for smaller portions or serving sizes. It's all you can/can't eat.

Sceptical Scot's picture

Considering the level to which Italians are already disillusioned with the political class (Mr Grill excepted), would not be surprised to see a run on some Italian banks in the next couple of days. Anyone know who does the security for some of these periphery banks? their shares might be a good shout....

hooligan2009's picture

dont worry, the IMF says Spain is doing great!

from here:


Tuesday, March 12, 2013

IMF praised "major progress" from Spain's economy in a report last month, offering encouraging news for the country's struggling property market.

A staff team from the International Monetary Fund (IMF) visited Madrid January 25-February 1 for the second independent monitoring mission of the financial sector. The team met with official and private sector representatives and presented its preliminary findings to the Spanish authorities and their European partners at the end of the visit.

The main finding of the mission was that "major progress has been made" in implementing financial sector reforms.

"The program remains on track," said the IMF, "the clean-up of undercapitalized banks has reached an advanced stage, and key reforms of Spain's financial sector framework have been either adopted or designed. Indeed, the bulk of all of the measures for the entire program have now been completed."

The IMF noted that "action is being taken to address banks' capital shortfalls".

This clean-up is a "major achievement that should strengthen confidence in the system and improve its ability to support the real economy". The bad bank also received positive comments, with the IMF saying that "important progress" has been made with SAREB.

The IMF concluded that "continued vigilant oversight" would be needed in the future to maintain the positive momentum, as Spain undergoes a difficult process of fiscal and external adjustment.

this from the same imf team that said cyprus was a top 32 economy in 2010 and from a property market (spain) that used to give away free cars with their houses!


Pseudo Anonym's picture

unjust my ass.  stop complaining

Not only is it excruciatingly unjust (it’s theft!),

you have 2000 years of precedents - you entrust your money to money changer and hofjuden run fractional reserve banking (fraud), you deserve to lose everything.  you deal w/ deceitful thieves - expect the results be as such as may be

dunce's picture

This is how avalanches are triggered. What are beleaguered depositors in the PIIGS going to think and do?

dunce's picture

This 10% deal is brought to you by people highly practiced in anal intrusions, the practice has always ended well for them. Relax it will only hurt for a little while, you have their word.

q99x2's picture

Oh boy this ought to get a few banksters doing the swan dive. You want a popular YouTube video post a bankster doing the bankster dive.


esum's picture

start sending people to mars.... or start a world war..... too many people... too many politicians.... governments ahve become cancers and kickback this the NWO playing ot