Europe's Good, Bad, & Ugly Reality (In 3 Simple Charts)

Tyler Durden's picture

Mario Draghi unleashed his ultimate "spend-it-all-now-or-you'll-lose-it" Keynesian demand-pull bazooka this week when he went full negative-rate-tard. While plenty of time has been spent discussing the "low-flation" and the total lack of credit creation (Keynes ultimate kryptonite), we thought the following three charts might bring home just how entirely broken (and dependent) Europe's economy/market has become...


First - the Good... European Sovereign Risk (GDP-weighted) is at an all-time low...the central-bank front-runners have front-run themselves to death as they fund cheap and pile into sovereign risk, forcing the banking system and sovereign ever closer together in a 'if rates ever rise, we are all doomed' vicious circle...


And just exactly how much "pressure" does this exert on policy-makers to make thenecessary change and tough reforms that are required? (spoiler Alert - None!)


The Bad... European Macro-economic data is in the toilet... just as not one of the super smartest economists in the world could envision rates falling this year, it was evident last year that the "Europe is recovering" meme was as viral as herpes at spring break... odd, how things don't work out as planned eh?


The Ugly... European corporate earnings are tumbling and expectations have collapsed...


But apart from that - TLTRO and negative rates will fix it all... well played Draghi.

But, as Bloomberg notes, not even the European establishment believes Draghi's efforts will have any impact...

President of the German Institute for Economic Research Marcel Fratzscher tells Handelsblatt that large and not unlikely risk remains that euro zone economies may fall into stagnation and deflation from which it may be difficult to exit.

Newspaper also cites Fratzscher as saying:

ECB measures won’t solve the fundamental problems of the banking system and lack of structural reforms


More expansionary fiscal policy may be helpful in short term but won’t resolve fundamental problems, including excessive national debt


DekaBank economist Ulrich Kater also tells newspaper that politically generated economic upswing may collapse into sluggish economy and higher debt when it expires, warns against implementing large scale, debt-financed spending programs

Charts: Bloomberg and @Not_Jim_Cramer

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Oracle 911's picture

Well as European I can say this:

We are screwed. Period. End of story.

I am Jobe's picture

Amerikas just puts the makeup better. No different. 

slaughterer's picture

Taxes are too high in Europe, and Europeans are just not very productive anymore.  

johngaltfla's picture

And things got a little bit jiggy with it in the Middle East when the UAE Central bank announced they will comply with the Basel 3 standards....

June 8th Middle East Stock Markets take a Mini-Swoon but Why?
Think before you comment's picture

Europe has 47 independet nations. You should't judge on "Europeans" as it's a nonsense generalization. The Germans, the Swiss, some nordic countries and others ARE very productive - and much more social than the USA. Despite higher unemployment figures, large parts of the population are probably better off than the middle class in the US. AND: Taxes are not high in general either. Corporate taxes are low for example in Ireland or Switzerland.

Oracle 911's picture

Switzerland is not part of the EU, and they are fine with that.

Think before you comment's picture

I didn't write it was. We are talking about "Europe" and Switzerland lies in the heart of it.

agent default's picture

Yeah, but they don't have to follow EU policies.

Think before you comment's picture

Only to some point. They have bilateral treaties with the EU and the EU is the largest trade partner. They are still doing fine - until now - and, yes, it's also (or maybe largely) because they are NOT part of the European Union. And this is because thanks to their direct democracy the Swiss were/are asked whether they want to be part of the disfunctional EU and switch the franc for the Euro. Of course they don't.

piliage's picture

Part of the problem is that many of the "productive" countries need a weaker currency, like France and Italy. Their productivity is being killed by having a currency that requires them to internally devalue. The Italians are HUGE losers on the Euro, and France is beginning to drift into internal deflation land too.

Hard to be productive when your currency forces you to be 30% more expensive than Germany and increasingly the UK and US. You will never win in that equation. The EURO was the ultimate act of political hubris and stupidity for many EU countries.

Peter Pan's picture

If one leaves levitating European stock markets out of the picture, there is nothing that engenders any real hope in Europe.

European stock markets are akin to a comatose and brain damaged patient showing a pulse thanks to a machine.

Winston Churchill's picture

The US market corpse is de fibrillating instead.So much better after five years

of ECT.

orangegeek's picture

let's get ready for shit-show Monday folks


another week of "make it go higher uncle Yellen, make it go higher" and we should be ready to tank


I particularly like the case of the missing leveraged commodities in China - take the collateral away and look what you have.....LOL....not a fuck of a lot.

dracos_ghost's picture

I really don't think any lasting price corrections until Summer '16. Then whoa nelly.

Greenskeeper_Carl's picture

I still don't understand how that commodities fiasco in china didn't lead to a pretty big surge in prices. You would think that the realization that there is a lot less of a commodity than previously thought would lead to it becoming more expensive. Oh well, I guess the same could be said of that gold the Germans will allegedly get back in 7 years

DoChenRollingBearing's picture

Bitcoin's price has been inching upwards lately...  Now +/- $654 each.

$126,000,000 recently crossed the wires recently.

That is largest amount I have ever seen watching's home page BTC transaction feed.  LOTS of money!  But, the devil is in the details as Beginning BTC Bearing Guy has discovered.  $1,304,000 of that was transferred for FREE!

Will Deutsche Bank or JP Morgan do that for you?  Hah!


dracos_ghost's picture

Winklevoss brothers setting up the ETF accounts.

DoChenRollingBearing's picture



An rrror in my note, sorry: should be

Also, a lot of the gross involves miner "BTC Guild" and probably and "exchange" (perhaps Bistamp).

Madcow's picture

Obviously, Europe is collapsing under the weight of excessive debt and taxation.

So why does the European Government recommend yet more debt and more taxation? Because their goal is not to build up the economy but to extract capital for themselves so they may re-invest it in Asia. The current arrangement is bad for people – but great for the political class and bankers (AKA “Gov-Co”).  This is naturally what happens when nation-state Democracy is replaced by Goldman Sachs.

Here is a glimpse of the “future” –



Traderone's picture

Europe is in no more debt than 'Murika' and you guys are still borrowing hand over fist. Also, my comments about America are probaly as ignorant and ill informed as American's comments about Europe.

dracos_ghost's picture

Why are you guys making it a USA vs EU thing? This shitstorm is because of a bunch of corrupt,sociopathic globalists(aka IMF) who have no allegiances other than to their own bloated egos who won't admit that the plan isn't working. Making it a thing side of the Atlantic vs that side of the Atlantic lets these fucking amateurs off the hook.

angel_of_joy's picture

It's all they know, mainly because it's all they've learned in school.

It also serves their interests in the very short run... which is how most Americans have been ALSO raised & educated to think.

NOZZLE's picture

Aftet watching the Obanga poland workout video, I'm stunned as to what the media is able to conceal from the public about his character.   You apply that to any subject, unemployment in Greece,  outright theft of the treasury in the US and you have to choose to ignore everything or consume yourself with fright as to what is comming. 

Gunter's picture

There is no Europe in a sense like the article suggests.

I haven't been to one of the other 40 or 50 European countries (which is probably more countries than you have in North and South America combined) since a long time, and can only say how it is in Germany (and strangely enough I don't know who won the EU elections weeks ago since nobody here could be bothered talking about that).

And I have been to a nice, big party on Satday, and talked to a lot of people complaining that we don't see each other as often as we used to.

The reason: work, work, work. Too much to do. One company boss I talked to, manufacturer of office furniture, was the only one complaining business is down. However, no reason to worry he said, still enough to keep on going, just earning a bit less than before.

Of course what the European representative of Goldman Sachs, Mario Draghi, did, will have dire consequences even for Germany. However, people don't realize it yet.

Until they do all is perfect, at least here in my neck of the woods. Perfect summer weather, BBQ, music festivals, everybody relaxed.   Why would that ever end?


hairball48's picture

I hope the EU, Japan, China, America, and ordinary citizens run up as much debt as possible, as soon as possible. I mean bring that debt shit ON.

Maybe that will lance this puss laden boil we call an "economy".

I'm tired of waiting on the U$Dollar to collapse.

hooligan2009's picture

negative rates at a central bank are a form of capital taxation...without any voters getting a say in where the money goes that is charged for the privilege ... who gets the negative interest and why should they get it and not anyone else? why can't the voter now charge the tax departments of sovereign states for the privilege of paying tax..yanno reduce tax bills by the amount of the negative interest set by the central banks?

methinks that the negative rate is fraudulent and is certainly undemocratic - nobody has voted for the ECB to allow banks to tax capital.

this is a device to transfer capital to banks from tax payers

ponders how this is not simply contracting the capital base of the economy faster than the lack of demand for goods and services is contracting already