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European Inflation Expectations Collapse To New Record Lows
Despite all the 'promises', all the 'whatever it takes', all the jawboning... actions and words appear unable to shift the world away from its disinflationary spiral that Central Bankers are so afraid of... US forward inflation expectations have cratered in recent weeks (to levels that in the past have triggered money-printing largesse) but it is European forward inflation expectations that have collapsed to record lows leaving Draghi caught between a deflationary rock and a Bundesbank-bating, Treaty-busting sovereign QE hard place that he knows deep-down-inside (given the cleasr evidence from the US and The Fed) simply does not work how it is supposed to (in the textbooks). As Deutsche Bank warned, "QE in Europe will be ineffective, but it will happen anyway - it is the only tool the ECB has to protect its mandate."
Presenting the death knell of the central banker...
Exposing Central Banker impotence this vividly should have some questioning exactly why we rallied the most in 3 years yesterday...
Charts: Bloomberg
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So, the cost of living in Europe is down? I don't think so.
The Spaniards and Greeks would agree with you wholeheartedly.
the same Spaniards and Greeks that at every poll still say they want to keep the EUR? oh, damn, I should respect the narrative, and not confuse it with facts
Yeah, I mean what are the odds that in Europe another vote goes 51% - Keep the status quo vs 49% we are leaving and will burn down the entire financial system that goes along with it.
There have been a couple Greek elections, an Italian election, and I fully expect to see a 49% National Front 51% UMP turnout here in a couple years in France.
But hey -- I agree -- if the Greeks and the Spanish keep voting for "Look how European we are" nonsense, I say let them cook in bankruptcy and misery.
you agree on the facts as presented. yet I somehow understand your statement as of Greeks and Spaniards voting against their interests. At a certain point it's up to you to explain what you think it would be their interests. What do you propose they should do? Exit the EUR, devalue, and spend moar? And this so that it does not come under a "hated" label of... european? If you do favour the NeoKeynesian solution, then say so. But sometimes you give me the impression you are just allergic to the blue and gold flag, to which here nobody ever swore an oath of allegiance, btw. you can burn one every day, if you want. in Denmark you can't even just fly it, there is a very strict law regulating flags
I have an allergie against fascism.
The EU and the EUR was imposed on its respective population without the will or consent of the people. Every vote about a Federal Europe has been "no" and yet the bleary-eyed EuroFederalists continue anyway. No European nation, except may Luxembourg wanted the EUR -- and now that we have it, we have bailouts and poverty everywhere. Then, every vote on the subject (that could be decisive) goes Pro-EU by less than the margin of error.
The Greeks and Spaniards habitually vote against their interets -- why? Apparently being "European" is worth throwing the next generation or two under the bus. I will never understand how out of almost 500 million people, not a single nation has enough people in it to realise what a economic disaster this is and leave.
so you are allergic to... fascism? As in... Germany, where you live?
very interesting. let me see what fascists argue for, in Germany: exit from the EUR, exit from the EU, national "Germany first" policies without regard or coordination with neighbours and european nations, a return of Silesia and other enlargements of Germany
isn't that curious that it's exactly what you are arguing for? how does it come that you are at the same time allergic to fascism and yet in exactly the same policy camp in regard to those themes?
further, you often make comments about whole european cultures being "less suited to a hard currency", "lacking work ethics", in particular the latin cultures like France, Spain, Italy. In Europe, this is "somewhat admissible" in certain environments like academia, if wrapped with statistics in specific discussions, yet otherwise... recognized by the wider political spectrum as the most fascist things you can say, completely political incorrect (way more then shouting "NIGGER!! in the US)", borderline anti-constitutional in Hessen and in the German Federal Republic
I'd argue with you on your allergy against latin cultures, but what for? I don't think you would amenable for arguments, logic or facts
you seem to be against eurofederalism, which I find fine - there you find me in a somewhat more moderate yet similar position
but don't come to me with "Allergy to fascism" while living in Germany. Your usual arguments are defined as fascist, in Germany, and you have yourself noted that. I strongly suggest you study a bit better the country you are living in. Start by asking your Eastern German girlfriend what she thinks is fascist or not, but don't miss to ask Western Germans the same questions
"...to the blue and gold flag, to which here nobody ever swore an oath of allegiance, btw"
I did not expect such a statement from you, Ghordius.
piratepiet, why not? Do me a favour and explain to House what you think about Germany and how it should behave towards your country. in short, your expectations. I think he'd be quite astonished
Ghordius, you have repeatedly refused to reveal your nationalities, seemingly in an effort to be seen as somebody defending the general European interest and not just a narrow national interest.
I understand, in a way, that you do not swear allegiance to the European flag, as Europe is a process in the making and far from that kind of stage. But there is a difference between not swearing allegiance and explicitly writing that nobody ( so neither you ) swore allegiance. What you wrote does not come across well. I think you are a political person, so I am sure you understand that.
You probably do not know my nationality as I never revealed it. I am neither German, nor French. I expect Germany and France to get along and stand up to the excesses of the US.
I see no need to involve House here.
Thanks for your great posts. I learned a lot from them.
The biggest problem with Europe is it is literally choking on excess bureaucracy. There are too many layers of government, too many control systems syphoning wealth and transferring it to a small group of elitists and government officials. Europe will not broadly compete against the rest of the world until the EU superstructure is removed.
Ghordo, and many of his friends would say it would be better to get rid of the national "superstructures" and keep the EU.
that's slightly slanderous. what is the difference between what I want as a maximum - a confederation - and your suggestion, which is even beyond federalization? Have a look at Germany, how many civil servants has Frankfurt? How many the semi-sovereign state of Hessen? How many has the sovereign German Federal Republic? Some thinning would be in order, but... that's the business of Frankfurt, Hessen and Germany, as long as they balance their budgets
Sure, you advocate for a confederation. If that is what is was, similar to the former Articles of Confederation in the US, then I would be all for it.
The problem is that the EU more closely resembles the USSR than the AoC in the USA. So while you can hold out a confederation as a great straw-man, its not what is happening. You are wanting a different system as we are. You are similar to all of "us" in that regard.
If you want a confederation of nation states, you should want to destroy the current system and advocate for a confederation in the future and not on a federation, or a federation in the making, which is what we currently have.
"The problem is that the EU more closely resembles the USSR than the AoC in the USA."
perhaps this is one of the problems we have in communicating: when I talk about confederation, I have some dozens of them in mind from the past. and you have one in mind that was called confederation, but was actually quite close to a federation, and at war, to boot, the poor thing
forget for a moment your "Articles of Confederation", remember that we have a much, much varied and long story, going back to Greek and Latin confederations, consider that the AoC is the very last example I would pick and look what the (my) definition is:
A) a number of polities that agrees on common action in relation to other polities
B) created by treaty (as alternative to a constitution)
C) dealing together with critical issues and
D) with members retaining critical sovereign powers,
E) including the right to exit the confederation
Federations are usually very weak on B, D and E, while in the current setup, the members have, and should keep, the critical sovereign powers of taxation, military and police, together with local civil service and nearly all judiciary
perhaps it would help in this US-centric context if I'd talk about a league, so to avoid confusions and misunderstandings
meanwhile... the USSR? there was very little dissent or discussion among the members, there. one of the most centralized decision-taking setups ever created
are there? do you have... numbers? like number of state servants, or number of ministries. we also have over one hundred political parties, do you suggest we should have only two? I'm not targeting you with this, I'm targeting this constant assumption that only because Europe has in-your-face socialist parties leads to european countries being more statist then... let's say US Republicans. Our poor, poor, do-gooder socialists sometimes even balance budgets, for example
meanwhile the EU superstructure is 30'000 people strong, for 500 million people, that's a thin superstructure
well... it depends. if mortgage payments eat up a lot of your income (like in the Netherlands) you don't feel it
but energy and food costs are lower, in aggregate, and they are still the biggest part of the calculation. the Keynesian point about Inflation Expectation is about people's shopping habits. If people start to expect prices to remain stable, they might... gasp! save, and shop later
which reminds me how people were exorted to do their patriotic duty and get out and shop 'till they dropped, in a different place and time
One problema in the USA with the formerly popular custom of 'saving' is that while you get a 0.05% on your "High Yield Account" you have to pay out for food which is easily up over 100% in the last ten years. Some foods soared up over 300%.
The peeples are squeezed in the middle.
food and energy lower? Over what time frame Ghordis? Most people expect to live longer 5 or 10 years. So I call bullshit. Go ahead bring diesel prices back to where they were in 2004, then you can make that statement.
+1 LoP
Apparently we live in Idiocracy, where yesterday is the ultimate reference point for today's ventures.
laws, you forget that europeans consume half the oil that Americans do. putting the whole energy discourse back to the price of diesel does not work, here
just one small thing, for example: taxes on gasoline and diesel. they were already very high 25 years ago, here. it's really more complex than that
Right you are except deflation applies to just about anything you already own and want or need to sell (unless you are in the economic class of the .001%) unless you have a Picasso or Rembrandt.
US forward inflation expectations have cratered
Deflation
it ain't that hard to say
Deflation in anything not necessary for survival, yes. Everything else, not so much.
Go ahead, deflate the cost of diesel back to 2005 prices.
Fucking bring it!!!!
Don't worry the central banks are in complete control. You don't need to read this blog or think for yourself. Fear = bullish. Buy stock and relax.
I wonder if they have a secret doomsday book like the Fed. If they don't, they need one
Yes but it's filled with poems about the English Monarchy.
DXY has almost gained back all its loss after FOMC minutes release yesterday ... FOMC worried about usd strength ... tough ... King Dollar will show Hoos the Boss
I certainly questioned WTF we were doing rallying hard last night.....didn't last v long though as many of us on here suspected.
i think of it as a spinning top
faster it goes ... no problems
slowing down ... wobbles accentuated
i'm sorry, +200 ... -200 ...+200 ...
scream a disturbance in The Force
"QE in Europe will be ineffective, but it will happen anyway - it is the only tool the ECB has to protect its mandate."
when all you have is a hammer ... then every problem is a ...
quoting Deutsche Bank's "EuroGlut" article? Euroglut according Deutsche Bank:
the eurozone produces, exports and saves a lot. Our benchmark doesn't. Ergo it can't be good, can it? Let's call it Euroglut and rant against it
meanwhile please do QE, but no, QE works only like painkillers, but nevertheless it would make us richer, we who work at the megabanks. Our benchmark did QE, four times, so it must be good, so do it. But no, don't expect it to do any good. But do it, will ya?
By the way....if you think US stocks are rolling over then take a look at the DAX....it looks like a total shitshow on charts
But how is GoPro doing today??
This is getting interesting. Word is Nein to EU QE still.
This is why we need more austerity in the USA, right? So we can have healthy deflation, just like Europe, which has racked up a record of sustained misery worse than the 1929 depression. Just look at our runaway inflation by comparison. Gas prices are up to $3.50 a gallon!
You don't have "austerity" in the USA...that's why your deficit and total debt to GDP is growing! And the runaway inflation is there...it's just not showing up in traditional (rigged) CPI measures...it's in various asset classes...namely equities, bonds and prime real estate.
What austerity is europe facing??? They keep saying austerity but its not happening... I live in IReland btw... In order for true Austritiy to work, cut every goverment budget/size of gov 50% and cut taxes 35 to 50 % and let the EURUSD go down to 1.10 and EU will explode with growth and prosperity.
....so again crying on msbc and gnashing of teeth about session lows, around the euro close, while and exact 618 retrace of yesterdays move.....lets get ready for yet another 1%+ move in 3 hours...
Unemployment at record levels and MENA immigrants flooding thru the gates and across the Med Sea are just the tip of their icebergs. Almost none of their QE 'trickled down' to job creation or productivity.
The EU is in deep water; ripe for some serious civil unrest.
Trillions of dollars of credit is deflating. Billions of dollars of qe will never keep up. Deflationary mindset setting in. Spiral begins. Deflation it will be. They will try to slow it, but that is all fed etc can do. Wait for better prices for everything.
Godzilla on a rocket board!
Godzilla on a rocket board!
Economy contraction and bitter cold nights without NATGAS the heat the house.
Guess you'll be eating a lot of bread and hitting the gay bath houses to keep warm.
The jackasses will NEVER get the inflation they are looking for, because they refuse to let wages rise as well.
You can't have inflation in assets when wages are in decline. Sorry, that's just the fact. You can't jump up and fall down at the same time. And you can't change the physics.
What they SHOULD have been pursuing is finding the proper balance between prices and the ability to pay them. Instead of fighting the deflation in prices, they should have been helping to ease them down to where they achieved proper balance.
Everyone would have stayed pretty much where they already are, just at lower values. In short, nothing would have changed for anybody...the rich would have still been rich, the poor still poor. But the economy as a whole would have been downsized pricewise to a sustainable level.
No surprise. All these developed economies have spent the past five decades discouraging production and encouraging consumption (Keynesain, demand side economics). What you get is stagnating growth (taking out the middle class) and everyone consuming but at a subsistence level (except the elite). That, coupled with a dearth of business demand, will always end up in a deflationary spiral.
Haha deflation? Where? Paychecks maybe but that's about it. Oh, that and color TVs which nobody wants or needs any more.
See, the front running EU think tank has gone tit's up.
http://www.europe2020.org/?lang=en
The other one is on crutches.
http://www.leap2020.net/?lang=en
The proles can still afford food. Must print more money.
Precisely, the idiots driving up wage rates haven't figured out why Apple built phones in Foxconn, not America. Once you raise labor rates on hamburger flipping, customers will vanish.
Presenting the fruit bat bounce!