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On The Massive Signal Failure In European Markets
European financial markets are still "partying their heads off," notes Punk Economics' David McWilliams, as even countries like Italy, Spain, Greece, and Ireland "are issuing more and more IOUs at lower and lower interest rates, " as investors "drunk on years of easy profits, seem to think that risk has all but disappeared." They are wrong! Right now, McWilliams explains in this brief clip, "there is a massive signal failure between the reality of the European economy - which is low growth, aging population, and falling prices - and the financial markets which are telling us everything is rosy." This can't last... here's why.
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Deflation is an increase in purchasing power; not a bad thing if your wages are stagnant. Inflation only benefits those nearest the free money spigot and that's not you.
It can't last? Nothing can last, and this show has lasted a lot longer than most any of us around here have believed it could. What if it just keeps lasting and us who have been right keep being right right to death?
"What if it just keeps lasting and us who have been right keep being right right to death?"
Clearly the system is under stress, and is creaking and groaning in many places. Japan's massive QE is not reviving their actual economy, and neither has the US's. What other ammo do they have? They can't overcome the law of dimishing returns, and QE has that going against it in spades, and worse all the time (see: Japan...) I don't know how old you are, but quite likely this implodes long before you die...
http://www.stuff.co.nz/world/australia/61177585/Suspected-Ebola-patient-...
Better Late than never ;)
Nice article. Interesting they mention Germany being separated by Goldman Sachs (inferred) from Russia. Maybe FRAUD has reached its limits and reality is busting through.
Agreed, people spend less when they have less to spend. Oddly, precious metal demand increases as price goes up, and decreases with lower prices. The same people who weren't interested in gold at $300 couldn't wait to back up the truck at $1,900.
It was once explained to me that when prices are falling, people will sometimes postpone purchases. If the object of your desire is going to be cheaper next month or next year, you might (or you might not) prefer to wait.
Only really applies to discretionary purchases, of course. If you need milk now, you're not in a position to wait a year to save a few per cent. If it's a car or a camera or a world cruise, you might be.
Markets don't show anything other than that money printing, asset purchases and artificial low interest rates can juice share prices. Investors in Europe are betting on the ECB to print and juice markets, same as in the USA.
Real economics are divorced from these markets. The attempt to create wealth effect is a driving force for ECB liquidity dumps. Europe is headed for a deep recession, Russia sanctions will just add to it's depth. Possible gas disruption or increased gas prices will add another factor driving recession. Mass illegal immigration will drive pressure on social spending. Europe is just plain fucked. Somehow the just don't see it coming, as if tax and spend, borrow and spend, print and spend, and manipulate and spend is a real long term economic model.
In human history, debt has never been this high. Never in human history has financial services been such a large % of GDP.
ECB just announced it will adopt the Federal Reserve model for economic central planning of the EU economy. This amounts to "print till you drop". Fiat! Fiat! Fiat! Fiat! Fiat!
"Mass illegal immigration will drive pressure on social spending. Europe is just plain fucked."
So is the US with millions more pouring into to replace the ones that will be given amnesty by executive order (after the November elections)
Debt, schmedt. Central banks have the unlimited power to print, and as long as that new cash just fills a deflationary hole, the party keeps on going. The only constraint on printing is inflation. If they are just filling an exponentially growing hole that never overflows, you never get inflation. If the hole gets filled and then overflows into the real economy, that's an ooops.
It is strange how the demographic timebomb of ageing populations is being accompanied by record youth unemployment throughout the West.
Yes, people are not spending because of PSYCHOLOGY (those Eeeevil "hoarders"). It can't possibly have anything to do with the fact there are no jobs, massive unemployment, and people are flat broke.
Not the best issue of PE.
Typical Deflation propaganda, problem is lack of savings due to shitty interest rates and too much debt, not falling prices...
They can always start a war to revive their economy like every other good Keynesians.
Building seven died for our sins.
what party are you talking about? most euro stocks have stagnated the last 5 years