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Will Europe Be Lead the World Into Another Financial Crisis?
he Markets Call “BS” on Draghi’s Promise
In 2012, ECB President Mario Draghi, pulled the EU back from the brink of collapse by promising to do “whatever it takes” in the summer of 2012.
Since making that promise, the two biggest problem countries for the EU, Spain and Italy, have both seen the yields on their bonds fall.
Draghi’s promise also lit a fire under EU stocks, with Spanish, Italian, and German markets roaring higher.
It is critical to note that Draghi accomplished this without actually doing anything. All he did was make a verbal commitment.
The only problem with this is that while sovereign bond yields have fallen and EU stocks have rallied, the EU economy has not recovered. GDP growth for the EU as a whole was a measly 0.2% in 2014… the same as fourth quarter 2013.
Indeed as the below chart indicates, the supposed “recovery” Draghi had hoped his promise would create has failed to manifest.
Draghi tried to gun the system by cutting interest rates to negative in June then launching an asset purchase program this month… but neither policy looks to be changing anything.
Italy is back in recession for the third time since 2008. Germany’s economy contracted in the second quarter of 2014 and will likely be in recession before the first quarter of 2015. France has registered zero growth for six months now.
And the markets smell “trouble.”
European financials have taken out the trendline that supported them since the 2012 bottom:
Europe’s crisis is not over, not by a long shot. Mario Draghi has thrown everything, including the kitchen sink, at the economy over there and has failed to create sustainable growth. It’s now just a matter of time before the next round of the Financial Crisis hits and the whole mess comes crashing down.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
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Best Regards
Graham Summers
Phoenix Capital Research
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Europe will drag the rest of the markets with it... its a global financial economy now.
http://www.globaldeflationnews.com/sp-500-indexelliot-wave-update-for-we...
"Draghi’s promise also lit a fire under EU stocks, with Spanish, Italian, and German markets roaring higher. It is critical to note that Draghi accomplished this without actually doing anything""E
urope’s crisis is not over, not by a long shot. Mario Draghi has thrown everything, including the kitchen sink? Slight contradiction?
Nice grammar in the headline.
Sheesh!
Might be talking about the Lead that will be expended against the 90% serfs when the crisis escalates?
Currencies are IOUs, glorified and pretty pieces of paper printed and handed out by governments. Whether because of modern printing options or in an effort to thwart counterfeiters most of us will admit countries have raised the bar concerning the appearance of their currency.
This has almost become a full blown beauty contest and taken our minds off what is really behind these pretty little tokens. A piece of paper with great power, based only on faith, they are mere promises of stored value and wealth, and the value of these promises can change in an instant. With this in mind the Euro may not be the best place to store your wealth. The article below delves deeper into currencies as a great "Trojan horse" for governments to fleece the average citizen of their wealth.
http://brucewilds.blogspot.com/2014/10/currencies-are-ious.html
We haven't left the last financial crisis yet. The one back in 1913.
I'd like to double up-vote this if it were possible.
I loaned you my vote
it is always better to watch others go into the casino. they leave and say they had a good time, hmmm really?
Let me gues gold is going to $50.000 again like last time?
I never invested in stocks untill a stumbled onto ZH few years ago, then I decided to invest based on the doom articles on ZH.
Sad to say I only lost money, I would be a much richer person if I had followed Yahoo financials..
GS said gold is going to $1000, and it seems to be going down fast lately?
There's no such thing as a free lunch. haha!
France simply needs to deliver those Mistral class ships and announce a programme of maximum economic cooperation with Russia to the extent permitted within the EU rules in order to get a major boost.
Agreed, but with their limited options that will most likely not be enough. I contend Italy being the country Americans love to visit is not getting enough attention in all of this.
Italy is the third largest economy of the Euro-zone after Germany and France, unfortunately it holds the largest public debt totaling over 2 trillion euro. This debt has been growing at an astonishing pace, even in more recent times and particularly as a ratio to GDP. The fact that the GDP is contracting has exacerbated the problem.
This is not sustainable and the country is held together only because of the direct intervention of the ECB which made over 102 billion euro of Italian bond purchases in 2011-2012 alone. This has continued since then and the sum has gotten much larger. Only through the LTRO can the finances of the Italian state be kept afloat. For more on how government debt has made Italy the Achilles heel of Europe see the article below.
http://brucewilds.blogspot.com/2014/09/italy-achilles-heel-of-europe.htm...
Italy can put a crowbar into their wallet and pay up with some of their gold. They have quite a lot of it.
Unless they have already sold it to GS and just forgot to account for the sale.
The Zh - GS link is one of the smaller mysteries of our time.
"Be Lead" (in the title) is a Caribbean patois one assumes?
Maybe it's just a measly try to use a common NLP-maneuver.
They are certainly leading the march to deflation...
wonder how much deflation can they export, however