NIRP DERP: A Chart Of What Europe Economy Really Looks Like

Tyler Durden's picture

Curious what Europe's true economic state is? The chart below, showing Europe's annual inflation or lack thereof, and which just dropped from 0.5% to 0.4%, missing estimates of an unchanged print despite the ECB's ongoing and losing war with disinflation, and soon deflation, shows all you need to know.

From Eurostat:

And from Bloomberg:

Euro-area inflation (unexpectedly slowed in July to the weakest in almost five years, underscoring the European Central Bank’s concerns that the economy is too feeble to drive price growth.


Inflation was 0.4 percent compared with 0.5 percent in June, the European Union’s statistics office in Luxembourg said today. That is the weakest since October 2009 and below a median forecast of 0.5 percent in a Bloomberg News survey of 42 economists.


Having unleashed an unprecedented round of easing measures, the Frankfurt-based European Central Bank is seeking to rekindle price growth and help the 18-country bloc’s battered economy. For the past 10 months the inflation rate has been weaker than 1 percent, less than half the ECB’s goal, while joblessness has remained stubbornly near an all-time high for months. Adding to the risks are the geopolitical tensions between Russia and Ukraine, and conflicts in the Middle East.

Soundbites from 2012:

“This is most likely the trough in inflation, and inflation will move slowly upwards from here,” said Nick Kounis, head of macro research at ABN Amro in Amsterdam. “It seems unlikely the ECB will take fresh measures to ease policy further -- I don’t see this as a trigger for a large-scale quantitative easing program, as long as this proves the trough.”


“What will be key is more of an economic recovery,” said Johannes Gareis, economist at Natixis in Frankfurt. “It’s clear that inflation will stay under 1 percent for this year, because the output gap and the spare capacity in the labor market are so big that they can’t exert much upwards pressure on prices.”

Optimism still galores:

The ECB predicts economic growth of 1 percent this year, rising to 1.8 percent in 2016. It sees inflation at 0.7 percent for 2014, rising to 1.1 percent in 2015 and 1.4 percent in 2016.

For July, the core inflation rate, which excludes volatile items such as energy, food, alcohol and tobacco, clocked in at 0.8 percent, unchanged from the previous month. The cost of services rose 1.3 percent.

But there is really one phrase for all of this: NIRP Derp.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Cattender's picture

so it's Bad then?

GetZeeGold's picture



Press conference in 3..2.....

Smegley Wanxalot's picture

I really feel sorry for those europeons .. having to suffer the indignity of paying less for shit. 

Won't somebody PLEASE think of the children!

Took Red Pill's picture

OT but I didn’t see this story here. WikiLeaks publishes 'unprecedented' secret Australian court suppression order --The suppression order is itself suppressed. 30 July 2014 WikiLeaks has struck again, releasing the text of a secret court order that cannot be published in Australia. The anti-secrecy group has this morning published a Victorian Supreme Court suppression order that WikiLeaks publisher Julian Assange describes as "unprecedented" in scope. The suppression order is itself suppressed. No Australian media organization can legally publish the document or its contents.

What could be so big and does it have anything to do with Malaysian planes?

dontgoforit's picture

I'm so confused.  I took the 'blue' and the 'red' pill so I'm now a zombie super-star football ballerina.

So, what's the secret?

darkpool2's picture

Nothing to do with planes.....everything to do with bribery and corruption and payoffs to senior government folks in various SE Asian move along please, nothing you need to hear more about

NoDebt's picture

I think we're all turning Japanese.

Sudden Debt's picture

you mean our dicks will shrink down to 2 inches?

sodbuster's picture

For some, 2 inches might be an improvement.

Sudden Debt's picture

it's in your best interest that your money become worthless over time...

sodbuster's picture

Want an indicator of HOW worthless money has become? Check out the sticker on a new Suburban- $70k! New diesel pickups in the $50k- 65k range!!! But yet, the truly stupid are shits and giggles cause their house "went up" in value. Meanwhile, people who have scrimped and saved all their lives, are offered less than 1% on the money they have saved. The Fed and all these central bankers are the biggest thieves of all time.

AdvancingTime's picture

It appears the central banks of the world have made the crux of their existence a balancing act. You can almost imagine these bankers standing atop a fence. On one side lays a field of inflation and on the other a deep pit of deflation. A new round of easing by central banks to combat a slowdown in growth may again be in the cards but do not be surprised if this time it is less successful. The magic of this policy is losing its luster. More on this subject in the article below.

NoWayJose's picture

How does the Euro go from 1.39 to 1.35 - a 2.5% drop in less than 2 months - yet this not have any effect on inflation? The Japs have trashed the yen and have achieved 'inflation'. Never mind - the numbers are made up anyway...

Ghordius's picture

remember that the european CPIs have energy and food in their calculations. and both went down in prices. and no, every time I make a few checks I have to find out that the figures are roughly accurate

which reminds me I have to challenge Sudden Debt about a few of his comments on food in his area

falak pema's picture

yes Merkel's austerity policy puts huge loads on the sovereigns, who were hoping that ECB printing and infrastructure investment would kick start EU growth and allow inflation to take the pressure off bank debt overload; all the while the lending rate stayed low.

That is Lagarde's message to ECB : ramp up the print as your inflation level leaves you plenty of room to pump and dump money so that the economy and banks can breathe.

Only problem : this runs into Merkel's NEIN. As she be the lender of last resort to ECB back up program and if the shit hits the fan....she gets it in the face. 

So NEIN it stays. 

Merkel is caught between a rock n a hard place. Austerity protects her financial risk but kills her market ! 

Now that Obammy is shooting at Putin there goes another client and energy supplier.

Mutti is now in the eye of the Euro zone cyclone; both East and South. 

THE DORK OF CORK's picture

Euro based wage and income deflation was used during the crisis to mask the free banking based highly inflationary production process within the euro construct which uses manic cross border trade to gain access to scarce money.

Irish Median Real Household Disposable Income (Euro) by Urban and Rural and Year
Urban areas
Y2004 : 40,056
Y2008 : 44,315 (peak)
Y2012 : 34,886
Rural areas
Y2004 : 30,717
Y2007 : 34,787
Y2012 : 30.337


The deflation was used to protect the rentiers.

ONS data.
“Since the start of the economic downturn, median household income and GDP per person have both fallen. However, the fall in UK median household income has been smaller than the fall in GDP per person over the same period. Between 2007/08 and 2011/12, median income fell from £24,100 to £23,200, a percentage drop of 3.8%, while GDP per person fell by 6.5%.”

Ghordius's picture

that's the ugly side of "little inflation". first, there is the usual downturn after an "animal spirit" unsustainable boom. and then... people find out that they are earning less

if those 2012 numbers were double - with half their purchasing power - people would feel "richer". or not

meanwhile may I remember the esteemed ZH collegue from Ireland that his country had a huge unsustainable credit-fuelled RE boom? and the telephone tapes of the Anglo-Irish bank managers? good to see you again, btw

THE DORK OF CORK's picture

Nominal numbers also reach back into 2004 if you care to look.

"Ireland that his country had a huge unsustainable credit-fuelled RE boom? and the telephone tapes of the Anglo-Irish bank managers"

You are using financial metrics of scarcity to describe events.

The truth is houses are in vast surplus.

They should be 10,000 euros a pop or something.

Why are they 100,000 euros plus.

I tell you why.

We must sell them to external customers with money to get access to hard currency.

But why this manic effort at external trade no matter how absurd.

Free banks create credit for cars and other great euro stuff which we must pay for it prices elsewhere.........

This is the euro dream / nightmare.


Ghordius's picture

how much does building a house cost in Ireland again? even without counting land? 10'000? how many man-hours do you get for 10'000 euros in Ireland?

THE DORK OF CORK's picture

Whats your point ?

The goods are in surplus

The money cannot be recovered.

Ghordius's picture

my point is that there is a thing called market price, and a thing called replacement costs

and in between, you'll find real speculation (not the casino betting in the financial markets, that's betting pure and simple)

you are arguing that the market price of a house in Ireland should be around 10'000, due to lack of demand. I'm asking: what is the replacement costs?

THE DORK OF CORK's picture

They will not be replaced.

Many houses will likely depreciate into dust if we go back into a more national system

Again whats your bloody point

They were simply conduit goods of extraction.

We can get on with half the number no problem.

It was a consumer war economy of overproduction - it was not supplying intrinsic demand.

People were simply looking for a yield as their basic income (purchasing power ) was far too low.

Whoa Dammit's picture

OT: CDC Ebola Guidelines for US Airlines

My takeaways:

We  have Quarantine Stations (are these new or have they been in place for other diseases?)

Sick passengers to be given masks "to reduce the number of droplets expelled into the air by talking, sneezing, or coughing" ( is it now airborne? )

Close contact is considered to be among other things a conversation at < than 3 feet (Once again is it airborne?)

desirdavenir's picture

In spite of what is often written here, I almost like Draghi's handling of the euro. I guess the plan is deflate and restructure on a sound basis, which would be a blessing for countries like France (and the rest of southern Europe) who would get a chance at becoming competitive. In France a pre-requisite is a collapse of housing (and CRE) prices to lower the cost structure for corporates and individuals, a stop to financialization (remember that one possible side-effect of NIRP is the freeze of money markets, and thus of shadow banking) to augment capex in production. Painful in the short term, but it leaves us a chance in the long term...

THE DORK OF CORK's picture

"the ECB's ongoing and losing war with disinflation, and soon deflation, shows all you need to know."

They are losing because they want to lose.

Wage and income deflation within euro states helps the rentiers at this moment of time.

If you look at UK balance of payments data you will see that the UK decided to favour more real goods over income (from RBS style free banking style operations) since 2007/08.

To achieve this goal wage and income was extracted from its euro hinterland via the introduction of IMF and ECB debt packages.

Surplus goods no longer consumed in the euroland hinterland finds its way into the financial centers

desirdavenir's picture

I would rather say they want to discourage debt leveraging by targeting money markets and try to engineer a gradual balance-sheet recession. Good in the long term, again.

Re. the rentiers, do you know a lot of people who have cash earning high yields anywhere in Europe ? Nowadays "rentiers" heavily use leverage (and thus debt), and discouraging endebtment targets them first.

THE DORK OF CORK's picture

Please read what I said.

If you look at UK balance of payments data you will see that the UK decided to favour more real goods over income (from RBS style free banking style operations) since 2007/08

The UK as a real goods trade deficit of 100 billion + Sterling a year - most of this comes from the Eurozone and not Asia.

The game changed in 2007

rentier activity is now all about the extraction of real goods from previously income producing hinterlands.

desirdavenir's picture

this is short term... Pillage today also means loss of industry (which is not competitive against importated goods at the current price).

ps: I wasn't aware UK's trade deficit was this large... Not saying that France would teach them a lesson (actually we tried to copy their model), but 10 billions pounds in july alone ?

THE DORK OF CORK's picture

The UK masks the data via "services" which is nothing more then driving around in circles while burning real goods

Sudden Debt's picture

okay... real inflation is near 10%... but they now call that growth... so even with inflation as growth, there's no growth and the fake CPI now says there's deflation...

that means the cooky jar is empty my socialist friends!!!

Ghordius's picture

SD, give me a simplified "basket" of your favourite brands. or just the name of the chains where your wife shops. do it and I'll tabulate a personal CPI for you

having uttered this challenge... LOL, yes, our socialist friends face an empty cooky jar. isn't that wonderful? ;-)

yogibear's picture

Grinding down, printing, grinding down, printing.... repeating. Currency destruction and a decline in the standard of living.

Have to pay for all that cheap money somehow.

The Most Interesting Frog in the World's picture

"the Frankfurt-based European Central Bank is seeking to rekindle price growth and help the 18-country bloc’s battered economy."

LOL, yep, rising prices, that'll help!  LOL too funny.  They will learn, to late, but the will learn.

sbenard's picture

Socialism sucks! But the collectivist tyrants never learn their lessons, do they?

gcjohns1971's picture

Sure they do.

They extract wealth until the system crashes.  Then they use the wealth they extracted to solidify more power for themselves in the reset.  After reset they begin extracting wealth until the system crashes.

It is we the common people who fail to learn the lessons of scarcity - that nothing is free, and those offering "free" goods and services should be viewed with the greatest suspicion, and ever greater suspicion as their giveaways continue.

But this is why Marx gravitated towards Socialism.  In the Communist Manifesto he EXLICITLY states that the communists have no ideology of their own, but only adopt the ideology that appeals to the greatest number for the purpose of seizing control of the government, and thence seizing the means of production.  He even EXPLICITLY states that communists aren't really socialists per se, but only advocate socialism so long as socialism appeals to the largest denominator.

The near universal appeal of 'free stuff' to childlike minds is why he found it appealing, and why the 'collectivist tyrants' are able to continue to prey upon humanity.

People are snared by their vices.  It is as simple as that.  It is a story worthy of Faust.

gcjohns1971's picture

You mean that people's liabilities are not being inflated away in Europe?


gcjohns1971's picture

I find it interesting that NIRP doesn't drive more Europeans into physical assets, and monetary metals in particular.

From my perspective, the banks offer to take some of your money as a direct fee in return for storage, and offer to take some undefined additional quantity as inflation resulting from loan creation.

The alternative with a PM or certain other physical assets would be a fee for storage, without the risk of inflation.

Now I understand the point that European inflation is marketed as low or deflationary - at least so long as we do not eat, travel, or buy homes.

And I understand that European banks are trying to repair their balance sheets, which implies low loan creation.

But the risk that seems to be discounted at present is the OTHER side of the Cyprus scenario - where spending-addicted banks and governments simply seize the deposited cash because it is highly available to them.

From that perspective Espirito Santo looks like Creditanstalt and my matress - the Bank of Sealy - looks increasingly more secure by way of comparison every day.

KnuckleDragger-X's picture

The fun part of this is they've turned national disasters into global disasters, it'll be awhile digging out of this one when it all falls apart. Personally, I recommend going long on non-hybrid seeds, garden tools and large caliber guns and ammo.

Youri Carma's picture

My quick take on this EU inflation chart: First inflation peak is from the bubble while the second one is from QE, imported inflation from the U.S. plus EU's own.

Spine01's picture

I, as many economists don't buy the deflation story. It completely ignores the elasticity of the demand with respect to prices. Glad the EU is doing this, it may allow them to repair their system long term.
As a contrast to what the USA is doing of trying to generate artificial demand by creating fake money or spending the future now by bring future growth forward in time. A loss loss proposition. What EU does is a lot more painful, but at least forces them to live with what they have now without spending their future more than they need to survive the huge imbalances they started with.

The USA is avoiding pain now, but increasing pain in the future.