Clearly Europe Has A Crushing Deflation Problem... Oh Wait

Tyler Durden's picture

When Mario Draghi set off on his latest quest to slay Europe's deflation monster, after an endless array of failed alphabet soup programs to inject money into stock markets mysteriously failed to fix Europe's insolvent economy riddled by record unemployment and trillions in non-performing loans, he clearly was guided by this latest Eurobarometer survey of Public Opinion in the European Union, in which virtually everyone across the board admitted that the most important issue facing the common folk in Europe is plunging prices and crushing deflation.

Oh wait... it says rising prices/inflation.

Well, that's embarrassing. Please ignore everything we just said, because paradoxically to "fix" Europe, Mario Draghi is desperately trying to make Europe's biggest problem even worse.  Or not: surely this is just a case when the 6 members of the ECB's executive board "know better" than some 330 million Europeans.

At the end of the day, none of that matters: all Draghi is doing is trying to make the super wealthy holders of capital even richer, and push global stock markets to unprecedented records even if it means crushing Europe's middle class into extinction, the same way Bernanke "succeeded' with America's now defunct middle class.

And for those who care, here is who is most impacted by Mario Draghi's "phantom deflation."

Source: Standard Eurobarometer 81, h/t @RudyHavenstein

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Latina Lover's picture

Channelling  the Rothschilds: Need more WAR, to kill off the excess eaters.

Gaius Frakkin' Baltar's picture

Terrorism shouldn't even be on the fucking survey. It's obviously a non-issue for the majority of people. Replace it with Ebola or Infectious Diseases.

Caviar Emptor's picture

In BI-flationary terms, Europe and Japan are doing well !
US following along down the same path, just a few steps behind.

Rising prices amid collapsing economiea

disabledvet's picture

"We had to destroy Europe to save it."

MollyHacker's picture

Russia is on the "the to-do list"

Sudden Debt's picture

There's wild mustang in the discounts section!!
I'm more of a wild hog fan but my dog likes the horsemeat.

disabledvet's picture

fine ..."destroy the euro to save. Europe." What's a little debauchery between friends?

KnuckleDragger-X's picture

Back in the day when horses were work animals nobody had a problem with eating them though they did tend to be tough and chewy. Now everybody thinks they are frigging pets and "cute" etc. Personally as a country boy there are several horses I'd of been glad to eat, especially the one that kicked me when I was 12.

Charming Anarchist's picture

If you get a chance, I recommend making hamburgers with a half-and-half split between ground horse meat and ground pork.  Delicious.

KnuckleDragger-X's picture

I ust treat it like bbq and into the smoker for a few hours...

Sudden Debt's picture

Americans should really look to this chart and notice the last colum.

Terrorisme, everywhere between ZERO or 1% with a 1% ronding error.

And that's a fact.
Actually, it's just the same as in America but you've got the army now patrolling your streets and your rule of law is nearing martial law.

OpenThePodBayDoorHAL's picture

'Murkans used to be brave, now they're sissies hiding under the bed. It's pathetic.

disabledvet's picture

When it comes to Enola...err, Ebola...yes I will run and hide.

Stormtrooper's picture

I stopped at the sporting goods store today.  Decided to look for some more optics to make the long-range rifle shoot tighter and also wanted to take a look at some more practical concealable handguns than the ones I have.  The counter was lined with people and the guns were moving out the door (AR-15's were the popular ones).  So, I gave up on getting service there and moved to the ammunition area.  People were grabbing 1000 round cans of mostly .223 and heading for the register.  These may be sissies but they are very well equipped sissies.

The problem is motivating them to work together in teams and doing the training needed to be a force to be reckoned with.  I have worked with these groups in the past and they can be very effective.  They are the guys that I want on my side when the SHTF or the Feds finally decide to suppress their "domestic" terrorists.  It is just that most people don't have the attention span and motivation to commit a weekend every month for training when they don't see a clear threat (not everyone reads ZeroHedge!).  Hopefully, they will pull together when the threat does become clear to them.  I think that those threats are going to slap them along side the head soon.

Ghordius's picture

having a good, long, hard look at this chart is in any case a good idea

note, for example, that WORRIES about "rising costs" in an environment of stagnating wages isn't the the same as "rising prices"

context matters

this chart, for example, is about the 28-strong EU (eurozone is 18-strong)

Note the Briton's biggest worry. They have the BoE's British Pound

Bloppy's picture

They should use the American trick of shrinking food container sizes. It hides inflation like nothing else.


Elsewhere: Ben Affleck's warped Islamoapologism too much for Bill Maher, mayhem ensues

Reptil's picture

everything is already smaller here
except our dicks

LooseLee's picture

Exactly! You can find them at Wall/Broad and K-Street!

Yen Cross's picture

     Greece 10Y    6.476    6.391    6.514    6.335    +0.086    +1.33%    03/10
    Iceland 10Y    6.787    6.787    6.806    6.787    -0.019    -0.28%    1:00:03

 Greek bonds have a lower yield than Iceland! Yes, the restructured Iceland that actually jailed some banksters. lmfao.

    Italy 10Y    2.312    2.312    2.359    2.306    0.000    0.00%    17:12:32
    France 10Y    1.265    1.270    1.301    1.262    -0.005    -0.39%    17:19:58
    Portugal 10Y    3.047    3.062    3.078    3.027    -0.015    -0.49%    17:19:43
    Spain 10Y    2.103    2.136    2.151    2.089    -0.033    -1.54%    03/10

 This shit is beyond laughable. The European bond market looks like a giant "shit filled balloon" ready to explode.

Al Huxley's picture

That'll teach those fuckers what happens if you run an accountable system!

Yen Cross's picture

  I swear Al... It's like I wake up every morning, and I'm living my life in Sephia tones.

  I've seen this shitshow over and over... It's like an earthquake that increases in magnitudes of (10) everytime the "big one" hits.

Al Huxley's picture

My biggest challenge is that everything so rigidly follows the script I keep thinking 'it can't possibly be this easy to see what's going to happen next', but these fucking guys have so few scripts, its just same old same old, day after day, week after week.

KnuckleDragger-X's picture

None are so blind as those who WILL NOT see. If they close their eyes tight enough it magically goes away.

Yen Cross's picture

    There's definitely some "rhyme to your reasoning" Al... You're not alone in your observations of this .gov preskool administration.

   It's so easy, even a Caveman can do it... I think there's some other agendas at play, but I'm not going to be a conspiracy theorist.

disabledvet's picture

Aren't you long yen? I mean WTF? Have been annihilated or what?

Omen IV's picture

So on RT this afternoon Keiser interviewed John Perkins - Confessions of an Economic Hitman - (former CIA)

and the exact question you speak to was asked  - why is the pattern always the same and the people in the USA dont get it

klockwerks's picture

Omen, simple, they don't want to. Busy you know with all these distractions.

q99x2's picture

Probably the same for the other nation-states of Goldman Sachs; like Austrailia and Canada. I think the NWO is going to go for the endgame. They are getting very close to the final chapter of using financial terrorism to control the world. The squid has devoured all of the assets in its domain and has begun to devour its own tenticles. Time to test the transporter and make a trial run back to q99x2.

Smiley's picture

Don't worry Europe, as soon as the weather gets a little colder you can go right ahead and provoke your silly little conflict with Russia and stimulate your economies as per Rothschild directives.  The US eagerly awaits your orders for armaments and munitions.  We do advise getting a head start on your credit applications at Societe Generale, HSBC Holdings, and Deutche Bank though.

FieldingMellish's picture

TPTB are doing their best to move opinion away from reality (the left side) towards fantasy (the right side).

Al Huxley's picture

Stuff the commoners need for day-to-day living doesn't count when you're talking about inflation.  I think if I recall correctly 'those prices are too volatile to give a good indication' of inflation.  Check the banks' balance sheets, I bet their mark-to-fantasy balance sheets are showing deflationary cracks.  Look at the European equity indexes, and the price of oil (and gold) - oh, and of course the mighty US dollar.  Look familiar at all?  Maybe 2008-ish?

Professorlocknload's picture

No deflation? No global warming? I've been saving all this time to buy a beach front house in Arizona for $2k, for nothing?

delivered's picture

The Fed as well as the ECB absolutely need and want inflation. Period. They know that there are only two avenues to get out of this mess (i.e., excessive debt against GDP and earnings/income). Inflation and deflation. They can either attempt to inflate their way out of the debt to GDP ratios to return to more managable norms or experience full scale deflation which will appropriately reset debt levels to much more managable and much lower levels (but at a huge cost). The use of QE and ZIRP/NIRP is only buying time until one of these two final outcomes is realized.

A couple of years ago, I thought inflation was going to win the battle but today, I have swung to the deflation outcome. The reasons are simple and based in two key facts. Debt as in there is simply too much public, private, and personal debt to be repaid against available income which is simply too low to service the debt (think personal earnings levels, governments that constantly run deficits, etc.). The only way the debt is currently being serviced is by secondary repayment sources stepping in to cover defacto defaults (e.g., CBs buying soverign debt) and through the use of zero real interest rates. 

My three keys to watching this mess unfold are simple. First is the Yen/Japan which may finally be realizing it's "Come to Jesus Moment". On top of a currency which is losing value quickly, the Japan economy is really in terrible shape from a demographic and competitive standpoint. The fact that Sony, one of Japan's best/biggest brands, can't compete on a global scale anymore and is getting smoked by Apple and Samsung should be a red flag. Second is CAT/COM as in Caterpillar and commodities. Both are under pressure as CAT is invested heavily in the hard commodities industry and commodities in general are deflating (base metals, grains, PMs, oil/energy, etc.). Third is the VIX and other volitity measures. As the Fed finalizes its QE exit, the markets will most likely experience some real heartburn/gas pains.

My guess is the current rise in the USD is causing the Fed some real concern as not only will US products be more expensive on a global basis (thus impacting demand) but in addition, US earnings from large mult-nationals will be negatively impacted and most importantly, the strenghtening USD will result in "deflationary" pressures to take hold (and not inflation). Absolutely not what the Fed wants. 

In the short run, I see a continued trend in the increase of the value of the USD, not as a result of fundamentals but rather as a result of being the only drunken sailor that hasn't passed out yet. Needless to say, this will be painful for PM investors in the near future so it is going to be very important to show a good deal of patience and dicipline when purchasing Gold and Silver over the coming months, acquirer on the major dips and deal with continued pressure as everyone ends up on the same side of the trade (i.e., in the USD). However, trading PMs in dying currencies may offer opportunities. 

But remember in the end one key thought. Excessive inflation will simply cost the CBs their jobs. Deflation will cost them their jobs and lives (as social unrest explodes with the great debt reset). The CBs are not going to go down without one hell of a fight.

jamochavez's picture

I am very much in the same camp with you. Also, I think we are starting to see the process speed up and seems to me the direction is impossible to change at this point

Skateboarder's picture

A most excellent assessment - I have also switched to expecting a deflationary outcome over the last couple of years. The complete uncorrelation between the velocities of wage inflation and debt/money supply inflation shows deflation. No one's gonna be walking around with trillion dollar notes to buy bread in America anytime soon.

disabledvet's picture

Ain't no deflation problem in da USA dude.

"Cheaper the energy gets the greater the demand for it." Hence "the dollar going through the roof." Definitely want to be selling any and all debt instruments over ten years here. Duration risk is off the charts when the. USA's entire healthcare system is about to be taken out by the biggest disease outbreak in world history.

Bell's 2 hearted's picture

Please post more often


 BIG Gold Star


Deflation ALWAYS been in US cards


QE/ZIRP disinflationary


Deflationary when asset bubbles burst

stant's picture

I am in the deflation camp as well

andrewp111's picture

The CBs have been fighting deflation for 6 years now, and are just treading water. I too think there will be a deflationary crash at some point, although I have no idea what will trigger it. The CBs won't go down without a fight here, but I doubt they can win without the fiscal side of the house (Congress and Preznit) on the same page.

Pandemics are also deflationary, if in fact we have one.

But after the deflation crash, there is likely to be massive inflation. You can't have a big deflationary crash without triggering the conditions for world war (we are almost there already !!), and the imperative of survival will cause the major powers to spend whatever it takes to win WW III. There will probably be severe price controls during the war, but at the very least there will be reflation combined with financial repression, and a massive inflation or a new monetary system after the war is over.

disabledvet's picture

Flu pandemics...yes. "Kill the elderly instantly." Not an Ebola Outbreak. That kills actual healthcare providers and the entire real estate/medical complex....there is no "vulnerable population" as the healthy and vigorous are in fact the most at risk. I laughed at the rally in airline stocks yesterday actually. "Ground Zero will be Manhattan" and I would avoid that place at all costs right now.

Ghordius's picture

"The CBs have been fighting deflation for 6 years now"

ALL CB's? really? The article is about the ECB, isn't it? Even though the stats are EU-wide

explain to me the year-long continued *shrinkage* of the ECB's balance sheet. "fighting deflation"? Seriously?

Caviar Emptor's picture

Inflation or deflation alone would be easy situations for the central bankers to deal with. Their musty textbooks written in simpler times never envisioned a world where Both deflation and inflation could co-exist. I've been predicting biflationary spirals here on ZH since 2010. It's a brave new wolrd where the old rules of economics don't apply

ThroxxOfVron's picture

"biflationary spirals "


We are suffering through a massive bout of fractal mathmatics instability.

Pressuring one part of the math equation by introducing repeated drastic expressions of input cannot stabilize a bifurcation.

The fools are trying to stabilize a system that they themselves driven into a mathmatically defined region of instability by excessively unbalanced inputs by increasing the frequency and degreee of the excessively unbalanced inputs.

The system will re-establish equilibria and return to previous levels of stability after the results are accepted instead of fought.

The equation has an outcome.  TPTB have repeatedly run the equation while raising key deterministic imputs at each iteration.  

Now TPTB have reached a state of diequilibria which cannot be controlled and decided that they don't like the result.

But, this cannot be undone.  You can't uncrash.

The system will re-establish equilibria and return to previous levels of stability after the results are accepted instead of fought.

What cannot mathmatically be repaid will NOT be repaid.  

The system cannot expand infinitely.  

Jubilee is the bifucation.

Jubilee isn't a social construct.  It is math.  The system cannot expand infinitely.  

UrbanMiner's picture

!?&!? - So many words, so little said.

RaceToTheBottom's picture

Why not simply bigger helicopters?  Why would they accept a loss against deflation when they can still print?  And they can always still print, when given the alternative for their Financial Masters.

sessinpo's picture


I've been telling everyone deflation for over a year now. And yes, I also called for a strong US dollar.  You still have to pay your bills, your taxes in US fiat crap. THANK YOU.

For all of you that bitch about rising prices of food, gas, etc. The fact is, with over $17 trillion printed, those prices should be at least triple what you are bitching about. It isn't because of deflation. And with QE ending, watch margins get squeezed, unemployment to soar and prices to go down to bare minimum until that business goes out of business (causing more unemployment).

Study the 1930s. Commodities go down including PMs. And yes I said PMs will go down. Interestingly, it is mining stocks that held up well which is where I will be looking to place some of my fiat crap.

UrbanMiner's picture

We are not experiencing deflation, those that argue for deflation have been totally and utterly lobotomised of their ability to look at reality. What is deflation? 

"A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending."

What prices have dropped? What governments have reduced spending? Credit has been restricted only to the degree that it cannot be paid back due to past obligations, the credit merely goes elsewhere, it does not stop. The credit bubble grows and grows, and grows, at this point if it stops the system simply collapses. The credit is being issued, but it is being issued into fewer channels but in larger amounts. 

What we are experiencing is debt accumulation reaching its critical capacity, some might want to call this deflation but it is not. Prices of commodities fluctuate as always, but look at the charts of any commodity over more than a 10 year span and it is plain to see that prices are not dropping, they are rising dramatically. People may be fooled by a 1 or 2 year dip in the upward trend, but the trend is writ in stone, diminishing resources, more people, more competition, more war, assures higher prices far into the future. Water will cost more, energy will cost more, food will cost more, why? Because of pollution, soil degradation, resource depletion, fishery collapse, war reconstruction, and higher bids by those right near the credit faucet. If you think things are going to get cheaper I have some tungsten filled bars to sell you.

I think the critical faculties of the once intelligent European are in a deflationary recession - with what glasses are you 'deflationists' all looking at the world? Do you pay your higher taxes? Your higher medical bills? Your higher gasoline and heating costs? Do you shop for groceries? Or pay for education? What world do you live in where you are experiencing deflation, please do tell. Is it because the western consumer has less money to spend that we hear screams of deflation? No need! The Chinese, Vietnamese, Indonesians, Indians, Russians and many others will pick up the slack I assure you, deflation is non existent except in the minds of the intellectually challenged. 

Is America in recession? Well which America are we talking about? I'm not in recession. I know many people that are, but also share experiences with others who are making more than they ever have, so who's in recession? It's not a simple black and white scenario. I don't look at the gasoline prices when I fill up, I just fill up, but many go to the gas station that will save them a few cents like it makes a difference after they spend their money on lottos and cigarettes. 

Another canard, the 'strong USD', are you friggin kidding me? Look at a 20 year chart of the US dollar index (a basket case of basket cases) and tell me the dollar is strong, whoever argues that the USD is strong and deflation is real are seriously challenged in the most important faculties. So you're a trader? Fine bet on the USD for a few months....


Its inflation or collapse, its all rather elementary. Money created as debt must continuously grow or it will collapse, I can teach kindergarten kids this principle but grown men and women, another story altogether.