The Financial Decline In Europe Continues

Tyler Durden's picture

Via Mark E. Grant, author of Out of the Box,

As Industrial Production falls -0.6% in Europe and as the economy shrinks -0.2% there is once again a good reason to pause to consider the ramifications for this going forward. As part of the data release this morning Germany and France did somewhat better than expectations but it was fairly marginal while the rest of the EU-17 continues to be mired in difficulties. Overnight LCH increased the margin requirements for both Spain and Italy as the banks of Spain keep increasing their borrowings at the ECB which is now at an all-time record. More troubling perhaps is the recent release of data from Italy which showed that their sovereign debt had ballooned to $2.437 trillion and the trajectory is more than troublesome. In 2010 and 2011 Italy’s debt was expanding by $7.90 billion per month but in 2012 Italian debt has increased by $11.73 billion per month for a projected $141 billion by the end of this year. In fact the Italian economy is shrinking by about   -2.5% while their debt is growing by 5.8% which is the baseline for an unsustainable situation if these trends continue.
To make matters worse Italy’s Industrial Production is down -8.2% from a year ago and down     -1.4% in the last month. I think Italy must be reassessed in light of the recent data and I would project further downgrades for the country and an increase in their bond yields as people recognize the severity of their problems. To me it looks increasingly likely that both Spain and Italy will soon line up at the feeding trough which is going to strain Europe, in my opinion, past the limits of what France and Germany can bear and then all of the superlatives and all of the great hype are going to come face-to-face with a very tough reality I am afraid.
Learning from the Numbers
When you sit back and take a hard look at the last two years you begin to learn a few things. If you just stick to the actual data and forget the rhetoric that surrounds it the picture becomes clearer. Each and every projection for Greece, Spain and Italy that has been forecast by the EU and the IMF has been wrong; dead wrong. This would be in overly optimistic to the point that anyone relying on these projections and investing on their basis would lose money as a result of believing in them. I submit then that it is a mistake going forward to accept their numbers as reliable and you should note this in your thinking.
When I stop to consider all of the talk, all of the bravado and all of the concentration wasted on Firewalls I am convinced that it was all a great waste of time. There is only $65 billion left in the EFSF and the ESM is not in existence and a tremendous amount of money has been spent not just by the Stabilization Funds but in the Target2 program and by the ECB trying to ring fence the core nations of Europe and none of this has stopped or helped the recession in both Italy and Spain. Europe has wasted a giant amount of time and money battling with windmills, the ever present evil speculators of course, but none of this has helped the two countries regain a sound financial footing and the austerity measures have done nothing except to make matters worse as the economies of these two countries suffer from their imposition. The European game plan has been flawed in my view and we are all beginning to see some actuality which is that all of the grand plans have made matters worse. In some sense Europe is damned if they do and damned if they don’t but there is no way to avoid the conclusion any longer that they are stuck in a quagmire from which there is really no escape without a lot of serious pain.
I think it can be accurately stated that the political rhetoric is no better in America than in Europe. The problem with Europe is that there are seventeen countries using the Euro each with their own national interests that are becoming more and more polarized between the healthy nations and the financially impaired countries. In fact there are only a few nations left in Europe that are in decent shape so that the bedrock is crumbling from beneath the construct and everyone wants everyone else to pay the bills which is becoming impossible as Germany, given its finances, increasingly finds itself in a very lonely corner. The key to winning in Europe is to watch what they actually do and not what they say they are going to do or what they might do. Time after time we have been disappointed by the actuality of their response and to hang your hat upon grand proclamations, such as the recent one by Draghi, is going to prove a very costly mistake. The correct approach is neither doom and gloom nor sunny optimism but to watch exactly what they do, what they implement, and react accordingly.
My final comment of the day is that Europe is getting worse and not better. Whether you turn your attention to Greece, Spain, Italy, Portugal or even Ireland; it is getting worse. Nowhere on the Continent are things improving and even in France and Germany the financial strains are beginning to show. It is not a question of Euro-bear or Euro-bull; it is just the numbers as they come rolling out month after month. It is the banks, it is the sovereigns and grand visions must, in the end, give way to the facts.
“The very powerful and the very stupid have one thing in common. Instead of altering their views to fit the facts, they alter the facts to fit their views... which can be very uncomfortable if you happen to be one of the facts that needs altering.”
                     -Doctor Who

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falak pema's picture

the financial decline in first world continues...many members to this oligarchy fest! 

French Frog's picture

"It is the banks, it is the sovereigns and grand visions must, in the end, give way to the facts."

Give way to facts yes, but not just yet: still plenty of time to suck in many off the non-believers that this time "it really really is different and I really really mean it this time"

GetZeeGold's picture



Just need to bail it problem.



falak pema's picture

we've been here in 1929. Its a repeat, but this time more perverse. As THEY got a forewarning in 2008 and did NOTHING.

More fool all of us as we elected these shills; at least I am not American but that is little comfort as Merkozy were on the same page as TARP/Ben/Paulson/GWB/O'bammy and consorts.

One big happy first world family in the pockets of the Oligarchs; or themselves, scions of these top oligarchical clans. 

Sandmann's picture

1929 was different. It was a fixed Gold Standard with tariffs and the British Empire where not a single bank went bust. The parities may have been misaligned and the Us and France may have been Gold hoarders, but the reality is the sovereigns were not propping up the Banks on anything like this scale - nor were they monetizing Debt.

This is very new. The scale is beyond comprehension. To transfer economic output to the Banks which then impose a Credit Squeeze is surreal. These idiots have no idea what they have created and no way out. It is the Kuebler-Ross Model  and these idiots are still stuck at Denial.

TPTB_r_TBTF's picture

maybe someone *wants* the system to break...

Ghordius's picture

+1, but that is the point, it's beyond comprehension. ergo it's psychologically possible to keep up the pretence, which makes continued confidence possible.

Look it from the other side: it is functioning. Ergo it is possible to produce the current output of real goods and services. It's the accounting that is all awry, with endless people thinking they own this or that.

So at the end it's only either asking A. "who is the real only owner" or B. "who shares unexpectedly the same thing"?

It will all depend on how the question is posed.

Which leads me to think that A might be the UK/US way and B the continental way.

zilverreiger's picture

actually netherlands, germany and france are doing SLIGHTLY better than expected with numbers in this morning all around 0 to .3% growth

boogerbently's picture

0.3% growth ???

That's their point, I believe.

zilverreiger's picture

especially france looks better, due to non austerity,

If we're crashing anyway, It's better to keep capital at the base of the pyramid regardles of how. fuck wallst/city scum

ElvisDog's picture

Except Hollande is doing everything he can to kill the French economy (driving capital away with 75% tax rate, killing corporate profits and desire to hire by making firing people illegal). My guess is that Hollande will be successful and soon France will be in recession too with higher unemployment.

Winston Churchill's picture

A rounding error.

CPI is fudged there also.

Peter Pan's picture

Each European nation is experiencing internal political, economic and social turmoil without even taking into account the other nations in the European partnership. How on earth they propose to bond even further by socialising their losses (debt union) whilst not wanting to adhere to one brand of fiscal austerity and one fiscal mechanism is beyond my comprehension.

For example the north of Italy has always despised the south for its lack of economic performance and fiscal adherence. And Draghi, Monti and the rest are being earnest in believing that a United States of Europe is possible? Give me a break.

The scariest part is that none of these protagonists has laid the full plan and strategy on the table as to how further union will see them pull through this nightmare. To me this is an indication that they are making it up as they go. Dangerous stuff.

Ghordius's picture

yawn. again the British "United States of Europe" line. Draghi, Monti and the rest? For all their faults, I don't think those two ever requested an USE. Please give me a break or point me to some seriously powerful political group requesting this British Obsession of an "United States of Europe". And please don't point me to the buffons in Brussels, they don't count.

Peter Pan's picture

Dear Ghordius,

If common debt (through Euro bonds) is not the lynchpin for a United States of Europe, then I do not know what is. This kind of union is dangerous and reminds me of unhappy couples who keep on having children (liabilities) in the hope that their marriage might become stronger. And as you can see Europe is having lots of children through their unstoppable deficits.

Ghordius's picture

+1 for a polite answer to my borderline comment. I agree with you. Fact is, there are no EuroBonds yet.

IMO the guys shouting for them aren't in the EZ

i-dog's picture


"the buffons in Brussels, they don't count"

LOL ... one grain of truth (buried in a long denial).

Omnes viae Romam ducunt!


"The term "United States of Europe" was used by Winston Churchill in his speech delivered on 9 September 1946 at the University of Zürich, Switzerland." (

Meeting of the 'Action Committee for the United States of Europe' (Paris, 18 January 1956) -

"European Union Energy Commissioner Gunther Oettinger said “we need a United States of Europe” and that “there is no ‘Plan B’” for the euro zone" (

"Angela Merkel Moves Toward a 'United States of Europe'" -

Ghordius's picture

I'm not sure if you are validating on purpose what I said.

Churchill was British and had this speech in Switzerland 1946, meanwhile he is dead.

The Action Committee? They had huge differences, didn't they? 1956. And if you look at them, no heavyweights, except Jean Monnet who was on his decline.

Gunther Oettinger IS a buffoon. He had some weight as chief of the Baden-Wuerttenberg CDU and had power as Minister-President of that Land. But then they had some scandals where he was involved and they kicked him "down" to the Commission. Just to demonstrate that the Commission is where failed EU politicians are set "to pasture". Usually with the comment "try to shut up".

Mutti! Oh, Mutti Merkel said that!? I would agree with you IF there wasn't that tiny thing that the context of when she said that was Germany saying "No Eurobonds without Fiscal Union". I think you know that she just tied the demand for EuroBonds with the EuroTax, and option neither Germany nor the others really want, up to now. If you look it better, you will recognize that Germany used this tactic several times since you (and I) are posting comments on ZH.

Offthebeach's picture

Is this repot accurate? Spain and Italy, +/- 105 million people. ,and only 5 comercial property transaction? Total, for both countries over 3 months?

( )

ElvisDog's picture

To me this is an indication that they are making it up as they go. Dangerous stuff.

Well, of course they are making it up as they go along. The people making it up have a wonderful, luxury-filled life and want to continue in that lifestyle. They know that people want to believe that TPTB are in control and know what they're doing, so that is the illusion they provide over and over with their latest Grand Plan to solve the debt crisis.

hugovanderbubble's picture


Ghordius's picture

I disagree, particularly with "The problem with Europe is that there are seventeen countries using the Euro each with their own national interests that are becoming more and more polarized between the healthy nations and the financially impaired countries."

If this were true, Germany would be behaving differently since long, as many other "healthy" nations. Just notice how the debate between the German SPD, CDU/CSU and FDP is shaping up. Next: elections in the Netherlands.

Nope. Europe is playing for time and is waiting for what happens next. Should the US brake, the euros will follow. Should the US continue to hit the pedal, the euros will follow, cautiously. It does not pay to brake too much, yet, the logic of a currency war bordering on a serious trade war.

Nevertheless, the braking instruments for the future are being set, see the European Fiscal Compact.

Uncle Sam is leading. Get this in your head.

GetZeeGold's picture



Nope. Europe is playing for time


Just how much time are you thinking you're gonna need again? Any chance you could step it up a little bit?


Ghordius's picture

it does not pay to step up the pace. as I quoted from Martin Wolf of the FT years ago: the world was trying to deflate the US while the Fed was trying to inflate the world.

IMHO since this is going at high speed since 1971 and only increased to a higher speed a few years ago, being patient is the only thing... take some popcorn, GetZeePhyz

knightowl77's picture

With all due respect, this "high speed" whatever, looks to me to be the world's most slow motion train wreck in human history....

Everyone is sitting on the sidelines eating popcorn waiting for what comes next. Here and in Europe...Nothing will get better until the people put down the popcorn and get off the sidelines....I do not see that happening until this mess resolves itself, IMHO in a collapse......

i-dog's picture


"until the people put down the popcorn and get off the sidelines"

TPTB know that this will not happen. Only on ZH is popcorn being consumed.

Elsewhere, the MSM is keeping the sheep well and truly in the dark, entertained, and ordering more calories ... and will continue to do so until well after the actual collapse!

The headlines on the MSM the day after the collapse will be:

"Transitory difficulty on xxx exchange. Authorities are pursuing the speculators responsible. Banks temporarily affected. Don't panic. Normal service will resume shortly. Don't leave your home until authorised. Don't talk to your neighbours...terrorists are spreading rumours!"

Ghordius's picture

i-dog, OT: this website, . I hope you don't use that as a source for your notes. I had a short look into it, found the article about Saint Francis of Assisi under the "20 most evil people of the world", thought I would find something online that would show the truth about him - which is not pretty at all - and found the most impossible story of him being at the same time Doge of Venice.

I mean please, the first Christian Doge of Venice?

Even if Marino Morosini was Francis of Assisi - quite impossible because the Doge could not leave Venice in those times and Francis was quite busy at other places (though the Church says that Saints can be at several places at the same time - hahaha), he was the 44th Doge. The 39th Doge, Dandolo, not a christian Doge of a christian Venice? He was a bloody crusader! And the 38th retired in a monastery. An earlier one, Ziani, tried to convince the Pope that Barbarossa should be excommunicated. I could go back the whole line showing that some of them were perhaps monsters, but Christian nevertheless, founding churches and so forth. And the Morosini family history is totally upside-down. There is plenty of archeological evidence for that.

It's one huge fabrication after the other, and badly fabricated. My youngest nephew could do better.

i-dog's picture

I haven't read that site (yet), Ghordie. I remember linking to it, within the last few days, for a particular purpose, without endorsing it as "the whole truth and nothing but the truth".

(Ahhh, here's my actual link):

"Check this out for a different perspective (even though it leaves out the Khazarian konnection):"

Note that I said: "different perspective" and also that I said "even though it leaves out...". By those two statements, I was signifying my scepticism of exactly how accurate it might be overall.

Indeed, I had no doubt at the time that it's another limited hangout, which means that it will contain a lot of truth combined with a number of obvious fallacies that can be easily debunked by "defenders of the faith" ... just as David Icke does with his so-called exposes of the 'elites' and then adding in stories of lizard people ... or other sites that expose the Bilderbergers then bang on about UFOs. Those spurious insertions are deliberate and they make your job way too easy!!! ;)

I have not found any site that contains only the true connections - or that I could link to even as a summary of my own assessment of the true connections. All are either limited hangouts or simplistic one-sided attacks on a single target within the complex web (like your own focus only on the 'MegaBanks').

Maybe your youngest nephew could help out here?!


PS. I've not looked into the Venetian connections to the Khazarians yet. Webster Tarpley (another limited hangout) talks about them and their connections to the Welfs, so I'm interested in pursuing it day. Do you have any good links?

[edit] PPS. Hmmmm ... a quick google search for Dandolo brings up some results with him as the 39th Doge, then, when I go to the wiki page result, it starts out describing him as the 41st Doge then, when one goes to their linked list of doges, they list him as the 42nd! I'm well used to Wikipedia containing deliberate mis-spellings and incorrect dates - as well as many disappeared pages for "persons of interest" - but it's becoming more difficult by the day to use the web for accurate research. <sigh>....

Peter Pan's picture

Ghordius, you say the United States is leading. The USA is not leading anything other than itself to a big stone wall. Sure it can manipulate markets for a time but it cannot bend reality forever. There is nothing in the current economic arsenal of the USA that gives it anything more than extra time and extra rope. The only thing it can do without a doubt is send the world into a tailspin if it so chooses.

Ghordius's picture

Yup. Until there is a policy reversal. Then the "fun" begins.

ElvisDog's picture

But the problem is that the U.S. politically is in a Mexican standoff. Neither political party will even suggest policy reversal (policy meaning unlimited deficit spending and free stuff for everyone) because the other side immediately will jump on it claiming they're killing old people and orphans. Look at what's happening to Ryan because he dared to suggest a plan to alter the trajectory of Medicare. Eventually the San Bernadino effect (forced government pullbacks due to lack of money) will spread upwards to the county, state, and eventually federal level. The federal level will be last.

Totentänzerlied's picture

The federal level has Ben Shalom Bernanke and Ben Shalom Bernanke has a fleet of printing presses. Also the states have more or less direct conduits to federal gov. money these days, part of "free stuff for everyone", if they didn't they'd be in bankruptcy.

Sandmann's picture

I think the US is meddling in the EU to try to keep the focus away from the US. Geithner is behind so much of the Club Med posturing by France against Germany. The simple fact is that Greece is in the Euro because the US wanted it in the Euro just as the US wants Turkey in the EU and its sidekick Britain pushes that policy against France and Germany.

The US is so deeply involved in the Euro situation that I suspect it is causing the stasis. The Southern Statelets need to have a SOFT Euro and the Northern States need a HARD Euro which is the only way to bring this inside Europe into balance.  The external position is made worse by China which is the basic proximate cause of the global mess.

China was given tariff-free access to US and EU Markets by Clinton their bought puppet. The only way that could work was by Incomes Falling in The West and an increase in Absolute Poverty and serious reductions in Government Spending. Instead it simply increased on the back of artificially low interest rates caused by recycled Chinese surpluses.  NOW the adjustment has to come and the total internal collapse of Western societies can re-balance the global economy towards China whose Mercantilism means it must stagnate once exports collapse.

You cannot bring whole new productive capacity into a global economy based upon Welfarism and expect the Welfarism to survive. THe obvious solution is to ceases paying Transfer Payments of all sorts and accept that Starvation should be integral to the Western model to adjust relative factor prices.


Ghordius's picture

sad. and you have your facts straight, IMO. the only point where I could disagree is the "need" for two EURs. They would have the same dilemma as the DM would have, the CHF has, and the GBP is risking. Yes, one short and hard devaluation, and then? It's only temporary relief, and the coffers of the wannabe Soroses are full.

though look it this way: "we" are enabling a new rising middle class of 220'000'000 consumers! Think about the bright future they bring us all, particularly for the grrrrreat grrrrand Multinational Corporations and their CEOs! Unicorns and flowers for everybody! I mean, everybody that is a CEO of a MegaCorps.

Of course, this new middle class speaks Chinese, so adjust your marketing and your products accordingly...

Flaming Ferrari's picture

There's another useful saying, not by Dr Who: "When the market is going up on bad news, don't be short" The Squeeeeeeze  up continues.

Ted Baker's picture


Sudden Debt's picture


Like legal tender and taxes... unless you print it into oblivion and create tax loopholes etc... BUT NOT HERE!

HONEST ABE! Yeah! You know, the guy printed on the 5 dollar bill...

SwingForce's picture

Mark Grant & Nigel Farrage, now there's a decent running mate.

boogerbently's picture

Nigel Farage,

Smart, honest, witty.....

How did he ever get elected?

GetZeeGold's picture



Never double-dog dare an Englishman.....cause he'll totally do it.


zilverreiger's picture

he's yet another city shill, not sure if he's aware of it himself

Meesohaawnee's picture

and so does the fruadulent equity market. i feel like im witnessing history. What will the write in the textbooks a decade from now?

Vince Clortho's picture

The people who run the show write the history books.  So if the same people are in power a decade from now, this is going to read like a fairy tale.  Kinda like what you get from cnbc every day.

IAmaMeatPopsicle's picture

This constant obsession with the economy and finacial markets is a diversion...  Watch G. Carlin's "American Dream" clip...  You are herd animals whose life force is used up by unknown entities.  Occassionaly, they manifest their presence in the form of humans, much like the Penn State scenario.  Young kids are prime energy.  The principle perps have been given jobs in the "government" sector while Sandusky will be the fall guy. The press has, for all practical purposes, made it go away (along with Paterno's statue).

Vince Clortho's picture

"... The press has, for all practical purposes, made it go away"

Exactly.  Sandusky and his front organization, the Second Mile, appear to have links to a nation-wide pedophile ring, a story that is being actively buried by the Main Stream Media.

Who is being protected?

Sean7k's picture

Social and war spending are a ponzi. The war spending benefits the wealthy through investments and corporate holdings. The bankers get the interest and the fees. The people get a promise .The difference? A normal ponzi has to worry about two things: the law and increased funding.

Central banks don't. They own the law and the governments. They can print at will. The only power that can expose the ponzi? When the money inflation depreciates the currency to the point that Gresham's law makes an appearance amongst a sizeable part of the population.

To have this happen, people must be willing to question the quality of their money. They must be willing to challenge their wage rates and benefits. They must be willing to pull their assets out of normal investment channels and run good money to ground.

So far, this has not happened. A cursory look at the PIIGS shows us that the people are still willing to sacrifice the quality of their currency and austerity for the promise of a retirement and menial job. The US remains a little behind the curve here, but will catch up. Japan is almost at the moment of decision.

Until the people make this huge intuitive leap, the bankers can game the spiral dowmwards, absorbing as much profit from the system possible. Based on the level of political and economic sophistication exhibited by the public, this ponzi isn't going anywhere.

Totentänzerlied's picture

Appreciate your point, but here was no "moment" of decision. It's been a series of moments of decisions going back 10, 20, 30 or more years. And Japan is actually further along than the PIIGs, they've just handled it with that legendary (uh-oh !!racism!!) Japanese resignation.

slewie the pi-rat's picture

a hard trend to befriend

sleewienomics likens this to dieting:  you try not to kill people while you suffer and look forward to a healthier you

the shrinky-dinkTM economy!


ella's picture

Woops, looks like the Austereity Fairy does not create prosperity.  Who knew?

Lednbrass's picture

There was no real austerity outside of news articles. Overall governmental spending didnt decline anywhere beyond a couple of percentage points in Greece, the whole thing was far more a media creation than mathematical reality.