"The Paucity Of Growth" - Previewing The New Political Landscape In Europe

Tyler Durden's picture

From Peter Tchir of TF Market Advisors

The Paucity Of Hope

By Monday there will have been a real shift in the political landscape in Europe

In Greece, there is a real backlash against the alleged bailout.  The bailout was never about Greece.  In the end, with PSI, it wasn't even about the banks.  It is some convoluted concoction brought about by the arrogance of politicians to admit they were wrong, "legacy" preservation, hubris, a complete lack of understanding of credit markets, and an inexplicable aversion to contemplating and exploring all actual possibilities. This could become disruptive as stances taken by the ECB and IMF will likely be attacked, rightfully so.  The decision to accept so much debt in an effort to recapitalize four failed banks will also be questioned.  In the end, hopefully the people will win concessions and have a more optimistic future.  Hopefully the ECB will get off its high horse and accept losses on their decisions.  With a balance sheet as bloated as theirs, they have plenty of "carry" to pay for those losses.  Maybe the IMF will stop pretending Europe is different and treat European nations like other countries where they have actually helped - but that help almost always forced the nations to restructure rather than pretend somehow that all will get better with the existing debt burden.  The direct consequences of Greece will have minimal impact on the markets.  It is small, and at this stage, such a mess, that disruption there will be largely isolated.  How the ECB reacts to demands that it take losses could flow into the broader markets.  If the Troika backs down on their "austerity" demands then we would likely see a reaction in the broad markets.  Most importantly will be the discussions surrounding Greece leaving the Euro.  If that becomes an open debate, then that has the potential to roil markets since so far the politicians have managed to deny it is a real option.  The impact won't be felt because of Greece leaving the Euro, it will be the speculation that other countries may follow.  The rhetoric and crazy sound bites that would come from this could provide weeks of entertainment and opportunities.

A Hollande victory is not just a shift in France, but a warning shot at Germany.  Merkel's direct support of Sarkozy seemed unusual and a loss for him has to impact her.  Whether she loses some power at home is debatable, but her ability to dominate the direction of the EU will have taken a severe blow.  That may turn out to be more important to the future of Europe than the change within France as significant as that is.

So, Europe is about to begin its "Audacity of Hope" moment.  I'm not sure how markets will react on Monday to the various results.  My best guess is that after an initial sell-off we see a rebound.  European politicians will start to say the "right" things about working with the new governments.  "Growth" will be the most commonly used word.  Equities “LOVE” growth. If there is one thing equity markets love, it is the talk of growth, stimulus, of more money being spent.  I think the equity markets will get sucked in.  Credit markets might get dragged along for the ride, but only reluctantly, as saying "growth" is far easier than achieving growth, especially if you actually account for the debt added to pay for that "growth".

That is the key.  Why is everyone so willing to believe Europe can achieve growth?  Let's assume that no one ever tried for growth before (though seriously, most policies implement in past 15 years had growth as at least part of the rationale).  What experience does Hollande have in creating growth?  If growth opportunities are so easy to spot and identity why do we pay 2 and 20 to hedge funds and private equity?  Why are venture funds so valuable if any group of people, with little business experience, can sit around parliament and just figure out how to create growth?  Why pay CEO's 10's of millions if not 100's of millions of dollars, if growth is so easy to create?

That is the harsh reality.  Identifying opportunities just isn't that easy.  Figuring out what projects will generate returns that pay for themselves is difficult.  A political body with many competing agendas is hardly likely to do better than companies whose whole goal is to find growth opportunities.  Corporations have no shortage of cash right now, they have a shortage of growth ideas.  If governments handed out €100 billion to its citizens or cronies, then we would get growth.  Without a doubt, GDP would go up.  But if GDP goes up by only €50 billion, what has been achieved?  NOTHING!  The country will just have more debt relative to its capacity to pay it back.  More time and energy wasted while capital is once again misallocated.

"Growth" which is really just code for spending, will be a failure.  The credit markets will see it sooner than equities, but equities will eventually see it too.  Saying you are going to become an actress is really easy.  Moving to L.A. in an effort to become an actress is a bit more difficult but still relatively easy.  Becoming an actress is really hard!  What is the percentage of people who move to California with dreams of becoming an actor/actress actually become one?  Judging by all the great looking waiters and waitresses who suck at their job but have huge attitude, I'm guessing the percentage is low.  The success rate of growth will be low too.  It's not easy.  But worse than that, once actual plans are announced, the markets will realize how feeble the attempts are.

Growth won't buy years.  It might not even buy months.  Like so much else through the entire crisis, the markets are willing to suspend their disbelief on the back of attractive headlines.  In the end, the actual plans disappoint.  Not because the politicians aren't good at making plans, but because the original announcements never had a chance of being implement and the suspension of disbelief (or critical thinking) was the market's real mistake.

The Paucity of Growth

If growth could be created by merely talking about it, we would be in great shape.  But it can’t and the data last week showed that conclusively.  The U.S. ISM Manufacturing report was about the only bit of economic news that hinted at any positive growth trends.  The equity markets decided to latch on to that report and ignore all the other evidence that growth was slowing.  European data was disastrous, at best.  PMI data was awful across the board.  Rising unemployment is making it ever more difficult to extricate themselves from the mess as the ratio of tax payers versus tax receivers deteriorates.  Data in China wasn’t much better as much of the data showed the slowdown in growth was continuing (as I wrote earlier this week, I remain a bit confused how data can be showing contraction for 6 months running, while still achieving 8% growth).  The U.S. data missed almost across the board, but somehow, ISM and jobless claims were enough for the bulls to latch on to.  Friday’s NFP data was the straw that broke the camel’s back.  It was a big miss.  To me, it was a disturbing report across the board.

  • Upward revisions to prior month jobs means the slowdown is accelerating
  • If that many more people had been employed earlier this year, the bounce in housing and other parts of the economy was even more disappointing
  • People continue to leave the workforce, yet programs such as disability and food stamps continue to grow in size

I couldn’t understand the market’s initial reaction, though by the end of the day, the move seemed a bit overdone.
This week’s data calendar looks relatively “austere”, so the debate will largely revolve around analyzing and interpreting old data, rather than reacting to new data. 

Central Banks – Reduced to Managing Expectations?

For all the talk, for all the press conferences, for all the re-assuring words, it is starting to look like central banks are on hold.  The Fed seems on hold.  The data this week wasn’t that bad.  While it wasn’t good enough to support stocks with the S&P at 1,400, it wasn’t bad enough to warrant putting QE3 on the table.  Finally, after almost 5 years of free money (the Fed was aggressive and using alternative measures as early as 2007), there is real discussion about what the policy is achieving.  For awhile, the only argument that prevailed was “it would have been worse without these policies”.  But finally, people are starting to ask the right question.  “Would we be better had we adopted different policies?”  The squirrel and the grasshopper question is finally being raised away from just the “blogosphere”.  The Fed and government policy has been to ensure the least amount of pain in the near term.  Those decisions have consequences that affect the long term.  We still seem to get away with an immense debt load, but even here, prior spending decisions are limiting future ones.

This growing debate is making it more difficult for Ben to do what he wants, and in spite of a relatively unified front presented by the Fed, dissension within it seems to be growing, at least in their private conversations.

The Fed, definitely willing to print money if necessary, is largely on hold, and each passing day, the hurdle rate of how bad the data needs to be increases, because launching a new program too close to the election would make even more people question the independence of the Fed.

Meanwhile, in Europe, Draghi seemed to have more room to maneuver.  Banks and a large number of politicians are clamoring for more easing.  He didn’t deliver.  He was actually relatively hawkish.  This is really important.  To me, it is a strong signal that behind the scenes, the roll of the ECB is being questioned.  Their portfolio of Greek bonds complicated the Greek bailout.  For as much as people thought SMP was a good idea as the ECB was buying Greek bonds, it turned out to be a major problem at crunch time.

The ECB had encouraged banks to buy the debt of their own countries.  That is starting to backfire, and is forcing many banks to turn to the ECB for more money.  Private investors look at bank balance sheets over-exposed to certain countries and sectors, run by bankers under pressure from the ECB and politicians to take actions they wouldn’t otherwise take.  This is restricting private sector lending to banks.

I believe that just like with the Fed, there is growing disagreement, within the ECB and from outside, about what policies should be pursued.  For the first time Draghi did nothing, not because it wasn’t within his power, or because he didn’t want to, but because powerful people are telling him to do nothing since it isn’t so clear his policies have done much good in the long run.

The Joy of Victory and the Agony of Defeat

With so many moving parts, my guess is that we will experience some brief “Audacity of Hope” rally.  The change will be good.  Germany will say things to make people feel better.  Hollande will make growth so easy that the European crisis will seem like a distant memory.  Then the stark reality will hit.  Economic data will point to continued weakness.  The debt burden will still be a problem.  Then, finally, talk of growth will just not translate into actual plans for growth.  Any attempt to give real examples of how to grow will be weak and pathetic.  Will the big plan be lending money to the EIB so it can lend money to green energy projects owned by Hollande’s friends?  Will that be the growth we get?  Sadly, it probably will be what comes out.  Growth is not easy to get.  There aren’t 100’s of 1000’s of AAPL’s out there, because growth, net of the costs, is a difficult thing to achieve.

Will Friday’s weakness continue into next week? Will it take longer for the “growth” headlines and rumors to counteract the move?  Will that spark a real long term rally or just a couple of days of short covering and sucking in underperforming markets?

These are all questions that need to be watched closely.  I think the rally will occur sooner than people believe, that it will be far more isolated to stocks than bonds (even of Spain and Italy), that it won’t be as strong as bears fear, and the concept that growth pacts can save Europe won’t last until the end of the week.

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Aziz's picture

The audacity of "nope".

Oh regional Indian's picture

That is a + 500 Aziz. :-)

Thing to ponder is this. There is a clear move to "Socialist"-ness world over. The red tide really is coming. And people are voting it in?

That is frightening, because it gives the sense that people have given themselvs up to the system and will do anything to make sure it looks after them. Any revolution will be arranged so as to clamp down even harder. And boy, them rabid socialists, they really know how to clamp down. 

I'm of course speakign of pols, not movements.

It's the same here in India, which anyways was given this weird socialist/capitalist disease by the Brits (on purpose of course) prior to their leaving.

Dangerous waters all around.


Watch the Supermoon tonight. I just saw it here in Bangalore. Like a searchlight!


smb12321's picture

I would disagree in the sense that hardly any Frenchman wants a doctinaire Marxist regime.  They want change and the guy who promises it with little pain (take other people's wealth, tax those who invest, etc) is winning.  Suprise.  Socialism will ALWAYS come out ahead when the contest is over feelings and doing the right thing - all that BD that really means nothing since socialism never does what it promises.

THis article is GREAT for pointing out that Europe is not about to do anything but build more debt no matter which way they go.   They're about as likely to institute "growth" policies as Zimbabwe.

falak pema's picture

the debt is already there, its huge and its privately created; by those who run corporations that don't pay taxes as they have off-shore transfer pricing structures. These guys do not create real wealth any more, they amass RENT and create Public debt. The same TBTF guys who have PUSHED in 2008 over 10 T of that private debt on to the public debt balance sheets, now continue their shenanigans unhampered. Where did you learn how to count and where did you learn how to reason when you finger point at the symptom of social decay in first world society  and NOT its CAUSE ? 

This is a systematic policy of return to elitist corpocracy feudalism that has been concocted over thirty years in Pax Americana, and its been programmed to bring down the democracies and republics of "people's" power structures, behind the tinsel curtain, and thus resuscitate the feudal order of global Oligarchy capitalism. Its got a name this model of socio-economic power control, its called Reaganomics, aka THatcherism-bigbangonomics, and naturally it runs the world from its two fuedalista strongholds : WS and City. 

Want to see Constantinople and Papist Rome survive ? You will be served, they will burn in fiat fed bonanza! By its own momentum! As in the past! And don't ask what it will be replaced by...As those who burn the Empire don't always know the answer. That's the destructive cycle of human "creativity" that bites the feudal order. History teaches us that. A new order always rises and "progress" always has a funny, distorted face. C'est la vie! I advise you to read the Renaissance age; when Machiavelli faced up to Erasmus. It led to a century of violence...despite Michael Angelo's genius, distorted from purity into "mannerism", by the nation state hubris, rivalling that of dying Popedom. Even the painter's visions, SYMPTOMS of the malaise of the Age,  were distorted in the rage of religious wars! Cause and effect...but the root causes only disappeared during the age of Enlightenment...and then some...as the cycle of human stupidity and cupidity is never ending. 

Have some popcorn! I am writing a novel on the Renaissance age and enjoying it!

smb12321's picture

Repeated studies have shown the levels of violence have decreased over the centuries for some reason.  Examination of skeletons 10,000 - 50,000 years ago shows a huge number killed by other people.  I'm still not sure why, when the subject of the European welfare state is raised, some feel compelled to start in on bankers, TBTF, corporate greed, etc.

The salient point - the most destitute countries - Spain, Greece, Italy - are traditionally mom & pop, not corporate states.  The mega corporations there are almost always  state-involved enterprises.  It was not banksters that caused Europe's problem but unattainable political promises, structural problems, a crashing birth rate and taking the easy way out by borrowing what they couldn't pay for.

Good luck on the Renaissance book.  I love history.  As an atheist I will probably enjoy your take on the events viz a viz the religious wars and church influence (though I freely acknowledge that science rose only because of the religious idea that we should discover god's secrets, an irony.

ISEEIT's picture

I've heard big shots in Brussels have been entertaining the 'idea' of pursuing policies that are "less stupid".

Amazing but true.


Oh regional Indian's picture

The European Superstate.

Makes me shudder.


butchee's picture

Growth-sterity 4EVA, Bitches!

bank guy in Brussels's picture

The EU and ECB authorities need to invite Peter Tchir to Brussels, Frankfurt and Paris for a LONG talk about what the hell they are doing here.

falak pema's picture

You questions are so biaised it begs the question if you ar not Rip Van Winkle asleep since 1999 or if you have the mindset of a half crazed financial shill in total denial.

The whole thesis here at ZH is that the last 20 years have seen the greatest destruction of true economic wealth and the greatest profusion of "funny wealth" in human history. And that this runaway toboggan in fiat disney world is totally out of control. So when you say "Why do we all still bet 2 & 20 with hedge funds, if this guy Hollande can talk about growth" you are asking your head which is up the financialista asshole what other news is there in that dark place other than what those HF vultures say. 

if you pulled your head out from that dark place and not stay in the logic of predatory power play using financial mayhem and fiat pumped pseudo heaven you would understand its time to get off this roller coaster toboggan. If hollande has a way of achieving that and maybe, maybe, reversing the trend in first world to pump and dump our real economic wealth into fiat virtual  nirvana land, he may have achieved the first step to going back to true economic growth. 

Break the predatory system is the ardent obligation of any elected person who aspires to power in the so called democratic world. 'Cos otherwise he is a total absolute political shill who is aligned with the corpocratic fascist mindset prevalent today.

Its as simple as that.

Short Memories's picture

I kind of agree with this,

Just like we see contradiction in the mass media we see it here too. One article talking about GS getting it wrong on purpose to fool their clients and the next article reading doom and gloom from a graph that came from GS.

Generally I think it's great what ZH is doing but I think they sometime fall for the same cherry picking of information that they accuse the mass media of doing


smb12321's picture

The Tylers usually do not deviate even if they pick and choose.   Most articles are simply rehashes of common sense.  France is massively in debt, job creation has virtually vanished and what do they do?  Elect a guy who has promised policies that will ramp up debt faster, drive away the wealthy, suck more money from the private sector and do absolutely nothing for job creation. 

Folks can talk all they want about Holland and some magical formula that will "get things right" but everyone with an atom of sense knows it is a fairy tale.  In the past Socialists could use money generated by the productive class but now everything is stagnant and all money must be borrowed.

Bringin It's picture

It's not just about money.

France is massively in debt, job creation has virtually vanished and what do they do?  Elect a guy who has promises ...

A lot of French don't enjoy being a war appendage of the Anglo-Zino war machine.

Funny how some people like you can't think past your wallet.

smb12321's picture

You are correct that I do think of my wallet first.  It doesn't matter what our feelings are or if we think it's nice or not, the first rule is that we must eat.  I'm not exactly sure what the Ango-Zino war machine is but surely you don't the declining UK whose "war machine" is not exactly causing others to quiver in their boots.

And your response still does not address the central question - how can a social welfare state like France continue with no job creation, more borrowing, fewer workers and more retirees?

oogs66's picture

he didn't actually say hedge funds deserve 2 & 20...or that ceo's deserve their money

falak pema's picture

right, he sits on the roller coaster and says 'its not my fault I'm on it; so while I'm there lets make money by robbing the poor.'

All the while saying : 'those government shills who are crony are to blame for this mess, and so when a guy says ' the financialisaton IS the root cause of this mess', we on this roller coaster are entitled to ask...'is this guy only flash in the pan or does he have a martian Uncle giving handouts?' 

Twisted logic can justify anything even denying  facts through bare faced lies, and neat side stepping when you sit on that roller coaster. 99% of us are NOT on that roller coaster...

GeneMarchbanks's picture

pema, everyone is looking out for their own interests; you know this. Surely you don't expect otherwise from good ol' Pete? Protection only comes from interest groups, the warmth of merging oneself with others: the Banking Religion + its Servants, Jingoistic 'Patriotism', etc. The Mob Mentality Supreme.

Choose now, not choosing leaves you intact i.e with a soul which will soon be unforgivable. The crowd will trample any individuals left, should there be some remaining.

AccreditedEYE's picture

It's not that easy for guys like Peter. When you manage others money or advise them on how to manage their money, it gets complicated.

Short Memories's picture

2012-05-05 Perigee, supermoon

harbinger of doom!

JustObserving's picture

Where will growth in Europe and USA come from if there are millions of workers willing to work at a fraction of Western wages?

There will be no growth but, perhaps,  a managed descent into lower wages is the best that can be achieved.  

The social unrest unleashed by declining living standards will grow.  Western debt and unfunded liabilities are growing exponentially and cannot be sustained.  Citing Kotlikoff from yesterday at Zero Hedge:

"For example, US government liabilities (official debt plus the present value of projected future non-interest spending) exceed government assets (the present value of projected future taxes) by $211 trillion, roughly 14 times GDP. This fiscal gap is formed using Congressional Budget Projections and appears, when scaled by GDP, to exceed those of all other developed countries (Kotlikoff and Burns 2012)."


AnAnonymous's picture

The social unrest unleashed by declining living standards will grow.


Declining living standards are not extensible. They depend on the environment.

At one point, you reach a floor imposed by the environment.

There can not be an adequation of wages and the minimal living standard imposed by the environment in Europe or the US.

The environment has been the recipient of way too much resources to sustain a working class living on third world wages.

There was an article here on this site (so internal referencing) about homeless human beings used as wifi towers.
Minimal wage per day: $20

$20 per day to live homeless in the US.

Reason? The environment and the concentration of wealth it now represents.

New wave of colonization being triggered as in the US citizen world, overpopulation issue and many people can no longer afford living in the US citizen nations.

_underscore's picture

>> Where will the growth in Europe and USA come from if there are millions of workers willing to work at a fraction of Western wages?


Nail on the head. It must come from subsidy (or, as it's become known, national debt) as ultimately even non-outsourceable hairdressers & personal trainers will have to adapt to a global market place (the afore mentioned will lower their prices to fit ambient wage levels or go out of business).

 Ultimately, we must all work as hard as Indians & Chinese for our bowl of rice - no ifs, ands, or buts about it.

The only protection I can see (at least for my generation) is to acquire hard (wealth preserving) assets - property/land, precious metals. The only solution now for Western govts. is to manage a decline in relative exchange rates & inflate away incurred debt. The big problem will be (as others have pointed out)  managing decreased expectation & whittling away entitlement/welfare/social costs & containing the resultant social unrest/dislocation.


hornster's picture

The USA could provide for it's own, if it comes down to that.  It wouldn't be easy of course.  China and India do not have the resources we do.  Of course that would be 180 degrees from where we are being led with the globalization thing, but when the debt SHTF who knows.

El Oregonian's picture

Only growth I'm looking at is adding Gold and Silver coins being sewn into my garments... Barbarish the thought... But a excellent thought/action none the less...

AnAnonymous's picture

Does it rely on an election?

It is quite nice to cover an outcome of an election but what about the other?

What lessons are to be taught if US citizen Hollande is not elected?

Quite surprising though to put forward that Hollande elected outcome at the exclusion of the other.

My guess is that this US citizen author will fall back on his feet by telling that one or the other candidate, it makes no difference. Or something.

Propaganda is cheap in US citizen land but you can make money off it, contrary to facts.

El Oregonian's picture

Only growth I'm looking at is adding Gold and Silver coins being sewn into my garments... Barbarish the thought... But a excellent thought/action none the less...

proLiberty's picture

This is only true in the Keynesian world of C + I + G (Economy = Consumer Spending + Investment + Government Spending). When combined with infinite fiat money creation, the nominal economy can grow to the moon without any changes in real economic resources.

In other words, when "growth" is only measured in terms of the currency units without respect to the value of those units, only good things happen. But since this destroys the ability of the participants in the economy to make rational decisions about inputs and outputs in real economic terms, they cannot know when they are making a profit or not, so they generally fail to. The real economy gradually declines as it consumes its real capital. Eventually vital components fail and this failure is transmitted throughout what remains of the economy, causing a cacade of failure.

This is EXACTLY what happened in the Worker's Paradise, the Union of Soviet Socialist Republics.

rwe2late's picture

It has been argued that trust is essential for an economy to function. Corruption breeds distrust. Few trust what our business and political leaders say or promise. Restoring trust would entail throwing the leading fraud artists and political criminals into prison (as for example has been done to some degree in Iceland).

Will Hollande do what is necessary? I hardly think so.

Although the analogy is somewhat inexact:

If Sarkozy is France’s swaggering George W Bush,

Hollande will be France’s two-faced Obama.


proLiberty's picture

Allow me to add that the people at the head of and staffing the world's central banks all graduated from the same few schools of economics, all had the same few professors, all learned from the same few text books, all hob-knob at the same few resorts (like Davos), all go to the same conferences, all give interviews to the same few journalists, all publish in the same few journals.  They are cut from the same bolt of cloth.  They all approve of what each other are doing and talk to their peers every day.  They are happy to coordinate and accommodate each other's needs, since all work for "independent" organizations.   They are all leading us over the same cliff of debt = assets, infinite debt = infinite assets, perpetual debt = perpetual debt servitude for the citizen and taxpayer.   These folks have succeed in subjugating the nations in their charge to a new form of slavery that Stalin would have fought a war to achieve.


lotsoffun's picture

and they couldn't give a damn about anyone outside of that circle who is simply one of the unwashed ignorants.


smb12321's picture

No, I think you and other ZH posters are wrong.  Most sincerely believe that they are doing the best they can for the world.  It's like preachers trying to get folks to believe there's an invisible being monitoring our thoughts 24/7 to see if we're naughty.  They are not malicious or lying - they truly believe that.

I think even BO in some obscure way thinks the denoument of the US is necessary, much like the prime ministers who led post-war Britain in her adjustment to a secondary category from Top Gun.   Most the bankers are not evil - they are simply dead wrong and like ZH posters or newsroom editorialists or Hollywood idiots, their only conversations are with those who share their opinion. 

rwe2late's picture

Our leaders are not lying?

according to smb12321 our leaders

"Most sincerely believe that they are doing the best they can for the world." and they are "not lying or malicious".


ROTFL hahahahaha

Did you learn that in Kindergarden?

Best for "the world" or best for "their world"?

You are the one who is most naively mistaken. Our leaders are not fools, though many of their followers who believe them are.


Our leaders fully realize what they are doing when they order millions killed, imprisoned, and tortured. They fully realize who will economically benefit by their laws and policies and how their own pockets are lined. Their actions are both "sincere" and "malicious".

Their vision of the "best" world is a world designed to be ruled by them, and designed conveniently for them to reap the rewards of rule. It is most naive to believe that their public pronouncements of doing what is in the best interests of "everyone" is anything other than an expedient and self-serving rationalization.


They lie purposefully and regularly. They lie about their decision-making behind closed doors. They lie about the existence of their policies and actions. They lie to mask base motives for their actions. They lie to conceal the evil consequences of their actions. They lie about present circumstances. They lie about their promises for the future.

And you are so very, very mistaken to believe BO is (either "obscurely" or in the slightest degree) attempting to dismantle the global empire, militarily or otherwise.

smb12321's picture

Politicians are like you and me.  In fact they are you and me - doctors, teachers, union guys, businessmen and too many lawyers.  They associate almost exclusively with folks who share their outlook, exactly like ZH readers.  The results of their policies are bad but they sincerely believe they are "saving" us.

They lie about present circumstances.   This is a common complaint from ZH posters and has to do with not proclaiming the world is going to hell in a hand basket or that the end is not coming June 14, "this fall for sure" or "in 2013, so says a You Tube video"  The prophecies of the end are more common on ZH than those of the second coming.

Just because something is inevitable (our default) does not mean it is predictable and just because folks put a positive spin on bad news does not make them evil or lying.  Take advantage and pick up some more silver on the slide.

dolph9's picture

Growth only comes from the mining of fossil fuels and the release of the enormous amounts of energy contained within them.

Even if there are still lots of fossil fuels out there, growth will slow down as they are increasingly of poorer quality, deep and difficult to get to.  You can't extract blood from a stone.

Meanwhile, in the industrial age the population of humans on this earth has exploded from half a billion to 7 billion.  All of them are hungry to be fed and will believe that they'll become millionaires and live forever.

They will soon discover that neither is going to happen.

QuietCorday's picture

Real economic growth in many European countries is laughable. I travel a lot around Europe and there simply is no springboard for anything, outside of projects or expansion sponsored by state corporatist-style bungs, to get off the ground.

The problem with so much economic commentary is that never analyses the street, and the street is where you see and hear economic and social warnings first. Across Europe, the cost of living, taxation and debt levels are just so high in combination that no-one can move, let alone take on added risk. You have to give people economic "freedom" if you want green shoots to appear, and there is no economic freedom in Europe for the vast majority of people.

Many EU countries including Britain are starting to feel kinda feudal, where most people are just working for the essentials and to pay the taxman. 

To my mind, Neo-Sovietism has already arrived in Europe, only no-one else can really see it yet. Notice how the solution to the economic situation in Europe and Britain has become solely the responsibility of the state and supranational political entities; there is no talk of the state getting out of the way, that the solution lies with economically freeing individuals and businesses. It is just more tax and more state spend, as though taking a 99-er's earnings and giving it to another 99-er, leaving the former with no spare cash to spend, save or invest, is going to help the economy. All this will do is turn the entire 99 percent into subsistence workers or claimers.

When such a notion becomes so all encompassing, and people give such power to the state through these understandings, you end up with the state taking over the entire economy when TSHTF because "it is their responsibility to do something". You end up with nationalisations, wage and price controls, and all manner of state idiocies as the state tries to control and solve something they simply cannot.

After the British local elections this week, I suspect this outcome will happen in Britain. People are so brainwashed, they clamour for more and more state spend, but never give a second thought to the fact the British government takes nearly 50 percent in direct and indirect taxes of the earnings of an average person on PAYE. My work colleague last week (average earner in the bottom 60 percent of the 99 percent) was bemoaning that he was always skint and always working (freelance on and above employed hours), and I just thought: of course you are, you pay more income tax a month than you spend on your rent and bills combined. 

CrashisOptimistic's picture

The real issue is really only about 6 weeks old.

The rejection of austerity is growing, and it is a rejection of mathematics.

The left wing has decided that austerity doesn't mean belt tightening.  It means improving the deficit math with tax increases and no spending cuts.

This is about votes.  Voters led down the very easy path of no spending cuts to their pensions and transfer payments are targeted.  

This is math denial and the only question in the minds of those perpetrating it is . . . can the delusion hold past the next election?

Christo's picture


I thought you'd be interested following links - Richard Koo @ Nomura and Velasco (former finance minister of Chile)


Andres Velasco (former finance minister de Chile)


Have a look you wont be disapointed!

Zero Govt's picture

"Equities “LOVE” growth. If there is one thing equity markets love, it is the talk of growth, stimulus, of more money being spent."

(cough, splutter... choke?)

Er, didn't we just have a quarter of collossal (€2Trillion) ECB spending?

And how have the European equity markets responded?????

...well Spains IBEX is down -30% (who've had the most ECB largesse) and most others are down -10% 

CryingBear's picture


Nachdenken's picture

The DAX has slid below 7000, Gold and Silver in Euro are at 6 month lows, WTI is 10% down, the Dow is on the 13,000 trench.  Sold in early May, or is it the sell off before the (rigged) bounce which will then trigger the next bull run. 

Economic indicators are manipulated and massaged and managed, so we have to orient ourselves with the readings of secondary, subsidiary and incidental indicators. 

It is not QE to infinity, infinty is forever and a year.  The USD and Euro areas are at risk, the curve has not yet turned decisively down.  that comes in 2014.  Sooner the better, for later comes closer to the anarchist dream.

Sandmann's picture

PE is BS. The reason there is no growth is that it is so hard to establish companies - look how expensive it is to set up a GmbH in Germany; how unreal it is in Greece or Italy - there is a Control Fetish which makes it hard for people to be INdependent because DEpendency is POwer.

In Europe you can get $500,000 as a journalist !  So long as you toe the line and sing the corporate song you get rewards without risk. Europe is a CONTROL structure making it highly risky to go it alone. PE or "Venture" Capital as you mis-name it is all about LEVERAGE not Management. The most creative UK entrepreneur James Dyson was refused funding by Permira because Hoover already made vacuum cleaners - he had to Self-Fund. Permira prefers to flip retail stores for easy money.

Look how much Bank Debt in Europe is due to Buyouts and how much needs re-funding. There are NO instances of PE Buyouts bringing NEW products to market in Western Europe simply selling out to Chinese Government companies.

Growth does not come from Asset Strippers