When Correlation Is Causation

Tyler Durden's picture

It is all too easy to dismiss endless charts showing long-run correlations that have become useless in the current liquidity-fueled boom in stocks and real estate in the US with the "well, correlation is not causation" meme, but in Spain, we suspect, few will argue that the relationship between the surging unemployment rate of the OMT-bound nation and its delinquent loan growth is hard to argue with. With both at record highs (and the latter picking up once again after a temporary haitus of seeming banking delays offered some hope), it appears the southern European nation is going from worse to worst.



but there is one 'thing' that is not correlated...


It's not just Spain though - the entirely fake-looking, relatively linear rise in official Italian bad debts is rising at the fastest rate since Dec 2011...


Charts: Bloomberg

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Scro's picture

What's your point.

monopoly's picture

Scro: You are kidding of course. Or are you that brain dead?

Dark_Horse's picture

Well, then the gov't should just start employing more people.

Then the bad loans will stop? I don't think so. 


slaughterer's picture

So far, the only thing registering the RISK-OFFness is PMs, lumber and copper (sort of).  Peripheral spreads, global equities, and corporate bonds are caught in a twilight zone without end.

firstdivision's picture


Just wait til Italian Bad Loans goes from Linear(due to able to fudge accounting) to Exponential (when reality rolls over accounting)

OT: So saw this

Obama Says Bernanke Has Stayed at Fed ‘Longer Than He Wanted’ (Bloomberg)
“Ben Bernanke’s done an outstanding job,” Obama said in an interview with Charlie Rose that aired yesterday, when asked about nominating him for another term subject to Senate approval. “He’s already stayed a lot longer than he wanted or he was supposed to"

Who will succeed him to shoulder the Taper Crash blame and launch QE5?

StormDrain's picture

They are floating Stanley Fisher

monopoly's picture

I think we just hit a new low in silver. Another day to go. 

slaughterer's picture

Italian/Spanish gov and banks are notorious for fudging unemployment figures and non-performing loans.  In reality, these much be far worse. 

Fish Gone Bad's picture

I am thinking a lot of people make shit up all the time, Spain, Italy, China, the USA and on and on.

monopoly's picture

Just look at how far away these stocks are from the 200dma. Does anyone remember when a parabola ended well? Hmmm.

moonman's picture

When it was the flight path of an ICBM?

timbo_em's picture

LOL that looks too funny: So either Italy has been misreporting their bad debt since 2012 or did someone magically re-define 'bad debt'?

SheepDog-One's picture

Here we go yet again....trudging back up 'the wall of insanity' again....bloody fucking hell is all this planet is.

Elijah Craig 18's picture

Here's a correlation-causation:  Spanish Bond spreads fall with Mario's Magical OMT announcement in Aug. 2012.


But this brings to mind your comment, Tyler, that Spain is OMT bound... Can a country be bound for something that doesn't really exist? And this despite Germany's "red line" in the sands of Europe.

Finnman's picture

Here in Finland we already expect to pay some bunga bunga to Italy, our Finance Minister, professional lady seen in fishnet stockings, is good friend with Berlusconi, I think

Ghordius's picture

who? Jutta? ok, she is somewhat cute, but she is also a social democrat, isn't she? ok, Berlusconi has broad tastes, I have to admit, though he might find her 37 years as a tad too many...

I really liked when she made a comment on her website which The Telegraph promptly misinterpreted her in the sense that Finland would leave the eurozone, last year in July

SheepDog-One's picture

Whole world is just insane now...no market reflects even the least bit of reality at all, thats strictly verboten, and things like revelations about govt spying on citizens just gets swept under the rug by a claim 'Hey, we once stopped a bad guy...so the ends justify whatever means we want!'. Bloody fucking hell.

buzzsaw99's picture

as long as banks and agencies don't count the non performing loans they'll be fine and that's all that matters

Pareto's picture

- an aside.  Aint is great to see that the only thing really moving up (and therefore benefiting from all this QE), are the fucking banks!!  Fuck it pisses me off.  When I see white candles I check key stocks, and its ALWAYS the fucking banks.  Getting a little sick and tired of that bullshit.

ebworthen's picture

CNBC reporting that FBI says NSA surveillance helped prevent a bombing of the NYSE.

The NYSE hardly seems worth surrendering the Constitution for.

And, perhaps those were domestic terrorists?

Tsunami Wave's picture

Gold is taking a massive shit in the markets today..... Awesome. I want to keep stacking up on the deep cheap. Thanks for the fake ass paper prices Jamie and Blythe!

orangegeek's picture

Spain is in the tank.  Italy is there with them.


Euro keeps climbing. USD keeps falling.


I guess failing members of the EU is bullish for the Euro.  Failure is wealth building.


Send us MO POMO.



kevinearick's picture

Military Selectivity: Employing Ignorance

The empire majority bridges insolvency with exploitation, until it can’t. The solution is in the empire reject pile. You can’t reject the rejects and everyone gets a second chance. Diplomacy is rejecting war, until you can’t. That’s mom.

The problem is the solution, from a different perspective. We learn by exploratory mistake, not by replication to avoid the mistake of learning. Let the gossiping herd build up steam in the opposite direction, while you learn to prepare for war, against its replication.

Measure twice and solve the problem once, on the third iteration. That’s dad.

The empire accelerates demographic replication into artificial borders, to produce artificial scarcity as MAD insurance. Labor creates temporary doors out of time / tune with empire, which naturally seeks to eliminate privacy in response. And empire employs the new process technology to reboot itself when the old box explodes.

The empire is like the tile game. If labor does not provide virtual circulation, the majority locks itself up with proprietary extortion, in a line of lines, with central control, waiting to pass through a dwindling number of vacant spaces, and the empire implodes. The states are already borrowing against projected Internet tax revenues, guaranteed by the Fed, and booking future leverage as current revenue.

The kids are said to be stupid by their predecessors, who are watching their non-existent pensions go down the virtual drain, because empire is already controlling the Internet into obsolescence. An empire is a lose-lose, divide and conquer proposition, separated linearly by time relativity.

Empires are built from the bottom up and operated from the top down. Government is the agency intermediary. It’s like discounting marginal utility on a flight after the premium seats are sold, to justify building more Dreamliners, and guaranteeing the airplane resale price to ensure NPV growth. Work harder for less money so the welfare police state can grant its responders with more toys for compliance.

Priming the pump can only be done in private, so you can adjust the gravitational pole at will. Children don’t come with a book because they are unique and integral. Direction is set at the prime, when you reconnect the new multiplexer to the retimed event horizons.

Development is a derivative of process, which is a derivative of that which is unique in you, which you are developing relative to the zombie zone. The physical development is the final derivative set, of which you are going to let the empire majority steal the second derivative.

Empire nature is to employ your development against you, with reverse engineering. From its own perspective, the empire moves incrementally forward to feed its ponzi. From your perspective, it falls further back in time, subjecting itself to natural quantum reversion, with increasingly complex and irrelevant specialties.

Work for skill, not money, its derivative. Jobs in empire expansion, backwardization, are temporary bridges to self-employment. The payoff is quality of life, which the empire is incapable of computing, or taxing. Tune your development in and the empire out. The only difference between voltage and amperage is resistance, which works both ways, unless you are the empire.

Empire employment is directly related to positioning the compliance breeding ponzi, “it’s not what you know, it’s who you know,” blah, blah, blah. Set up your hash table multiplexer to collect pieces of your skill bridge from the empire event horizons in parallel. Each hash is your exit, and the robots assume you have been destroyed, because you lost your place in the circular queue binding them.

The brain is a muscle. The proper response to a robot is a robot. Employ intellect to rule out that which is not instinct, to develop building block skills amidst ignorant gravity. Balance to present no separation of charge and your exit will present itself, as the robots seek to eliminate your privacy, in their programmed attempt to eliminate free will.

Your ability to enter and exit at will depends upon your observation prism, the amount of bias you apply, the extent to which you yourself seek self-confirmation in the empire mirror. As your physical and intellectual mobility increases with skill, the empire automatically attempts to limit you with self-destructive force, implosion.

The empire majority tracks social variance characteristics and outlaws them indirectly. Human robots, being creatures of habit replication, will allow behavior modification in their ‘paid’ public life to cross over into their ‘unpaid’ private life, until they have no private life and expect others to be subjected to the same law, equal opportunity to be retarded in time by peer pressure, intellectual or physical prison.

If you do not employ your subconscious, the empire will be happy to do it for you, until you have no conscious. If you just want a job, any job, apply with the state as a child support representative, because the empire’s primary mission is to dissolve the labor family, and the state is always hiring to feed itself.

CSRs are also in the best position to view the middle class pump stations, which accounts for their attitude. While you are looking, examine the demographics of at each station over time. All jobs are rigged accordingly. The cyclops shark is a digital machine; it knows what it is told. Don’t poke it in the eye with a stick or alert it to the work of others and expect a happy outcome for yourself.

Take a $10/hr empire job, to build skill, which you will find wherever you go, and, sooner or later, you will be able to charge the empire $125/hr. When you see me having a double before work, ignore me and I will give you a ride when you get to the elevator. Everyone else takes the stairs, and the herd always travels down stairs. Build your community while others sleep.

jtlien's picture

I was reading about the cost overruns on the Spanish submarine program...

Say Wah?   Why is a country that is heading swiftly to bankruptcy and has 15-20% unemployment building submarines?

To protect from enemy ships?   In a real war, any ships will be blown out of the water by jet fighters in a week.    Then what are the subs left to attack?

Makes about as much sense for Spain to be building submarines as it is to put a screen door on them (the submarines that is).