When Correlation Is Causation

It is all too easy to dismiss endless charts showing long-run correlations that have become useless in the current liquidity-fueled boom in stocks and real estate in the US with the "well, correlation is not causation" meme, but in Spain, we suspect, few will argue that the relationship between the surging unemployment rate of the OMT-bound nation and its delinquent loan growth is hard to argue with. With both at record highs (and the latter picking up once again after a temporary haitus of seeming banking delays offered some hope), it appears the southern European nation is going from worse to worst.



but there is one 'thing' that is not correlated...


It's not just Spain though - the entirely fake-looking, relatively linear rise in official Italian bad debts is rising at the fastest rate since Dec 2011...


Charts: Bloomberg


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