It wouldn't be the new normal if the collapse in Q2 US GDP to sub-1% wasn't met by a new record high in the Dow Jones. And it certainly wouldn't be the new abnormal if a day of resplendent green in European bourses didn't have some "matching" economic news out of that perpetual reminder that Keynesianism in the end always fails: Greece. Luckily, validating that all is unwell and stocks can proceed to soar to record highs unbothered, on one hand the Greek Statistics Office reported that Greek unemployment in April just rose to a new all time high of 26.9%, up from 26.8% in March, and up from 23.1% a year ago, while Kathimerini reports that Non-performing loans: those perpetual thorns of insolvency in bank balance sheets, just surged to €66 billion, amounting to a whopping 29% at the end of March from a "manageable" 24.2% at end-December. That's a ridiculous 20% increase in total NPLs in three months that was only exposed due to the Troika's stress testing! Just how atrocious is the reality on European bank books anyway?
First, from Elstat:
Unemployment rate in April 2013 was 26.9% compared to 23.1% in April 2012 and 26.8% in March 2013. The number of employed amounted to 3,636,042 persons. ?he number of unemployed amounted to 1,337,621 while the number of inactive to 3,337,051. The corresponding figures for April 2008 to 2013 are presented in Table 1.
The number of employed decreased by 159,955 persons compared with April 2012 (a 4.2% rate of decrease) and increased by 43,668 persons compared with March 2013 (a 1.2% rate of increase).
Unemployed increased by 194,746 persons (a 17.0% rate of increase) compared with April 2012 and by 24,025 persons compared with March 2013 (a 1.2% rate of increase).
Inactive persons –that is, persons that neither worked neither looked for a job– decreased by 23,770 persons (a 0.7% rate of decrease) compared with April 2012 and by 20,218 persons compared with March 2013 (a 0.6% rate of decrease).
A chart which may be confused with the S&P:
Youth unemployment was... well, here it is:
As for the insolvent Greek banking sector which keeps getting insolventer:
Nonperforming loans (NPLs) issued by Greek banks soared again in the first quarter of the year, as according to a draft report by the representatives of the country’s creditors, delayed loans amounted to 29 percent at the end of March from 24.2 percent at end-December. This has taken their sum to 66 billion euros, although some 40 percent of that (26 billion) is covered by the banks’ provisions.
The representatives of the European Commission, the European Central Bank and the International Monetary Fund – known as the troika – do note however that the rate of creation of new bad loans has slowed, adding that the quality of banks’ portfolios is continuing to deteriorate owing to the recession.
In that context, the banks’ stress tests, to be conducted in the fall, constitute the next major challenge that local lenders are set to face.
According to the troika’s draft report, the upcoming stress tests represent the next main action to determine the strength of domestic lenders vis-a-vis the crisis and their capital adequacy ahead of macroeconomic developments and forecasts in terms of the country economic state of affairs.
We are confident that Greek banks will pass all tests, stress or otherwise, with flying colors both now, and when NPLs finally hit 100%. After all, they can only go down from there.