“As more and more countries within the European Union struggle economically, the euro – the union’s common currency – becomes more embattled, with its founder now even predicting its demise.
German Finance Minister Oskar Lafontaine, who was responsible the euro’s development and launch, is now calling for the end of the single currency in order to let southern Europe recover. He says if not, the current fiscal course is “leading to disaster.”
“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said, according to the Telegraph, one of Britain’s largest dailies.
“The Germans have not yet realized that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he said, adding that much of the current fiscal crisis has come in large part from Germany’s squeeze on wages, in order to gain export share.”
Via Natural News
“The Greek economic depressionary catastrophe continues to merrily chug along. Hours ago, Greek Elstat reported that February unemployment rose to a new record high of 27.0%, with the January number revised from 27.2% to 26.7%, up from 21.9% in February 2012, and almost as if unlike the Greek BLS is not even trying to fudge numbers anymore and wants to show a deteriorating situation (or, as it was called in the Old Normal – “reality”). “
Via Zero Hedge
“Spain’s underground economy is reportedly 19% of GDP. Is it? Who knows? Whatever it is, Visa has its eyes on transaction fees while holding a carrot in front of the Spanish government regarding more taxable income.
Via Mish-modified translation from Libre Mercado, please consider Visa recommends Spain further limit the use of cash transactions. “
The black market economic activity is beyond the control of the Treasury, and is one of the major objectives of the government during the current crisis to try to raise tax revenues. In 2010, Spain decreed the obligation to report all transactions greater than $ 3,000. In 2012 a ban was placed on cash payments in excess of 2,500 euros.
Visa Europe now recommends that the Government of Mariano Rajoy further restrict the use of cash to combat the underground economy and, thus, increase tax collection. Visa suggests a measure similar to that adopted in Italy, where the limit is set at 1,000 euros.
“While GBP jumped and the world celebrated the UK’s recent avoidance (for now) of a triple-dip recession (defined on GDP as opposed to reality), the situation in the island nation appears to be going from bad to worse. As Carney takes over the reigns of this once mighty nation he faces a country deeply divided. As the BBC reports, while London real estate prices smash old records, a stunning one-in-five households borrowed money or used savings to cover the costs of food in April. This is the equivalent of five million households unable to fund their food via income alone. Over 80% of these people are concerned about rising food prices (just as print-meister Carney is about to go ‘Abe’ on them) and almost 60% find it difficult to cope on their current incomes. The director of the consumer group ‘Which?’, noted that “many households are stretched to their financial breaking point,” as “families face a cost of living crisis.” While equity and real estate prices hit all-time highs, the opposition sums up the country’s feeling, “this incompetent government needs to wake up to the human cost of their failed economic policies.”"
Via Zero Hedge
“While near record low sovereign bond spreads and near record high equity prices have been taken as vindication by the European elites that all is well and ‘we just need a little less fauxsterity’ to be done with this crisis; the data, as it so often does, says the exact opposite. European unemployment just broke above 12% for the first time ever and European youth unemployment remains miserably above 24%. And while 1-in-4 under-25s unemployed is a bad enough statistic in terms of likely emergence of social unrest, the individual countries are in general deteriorating once again at a faster rate. French youth unemployment has risen for 13 months in a row to a record 26.5%; Spain (at 57.2% of under-25s unemployed) is catching up fast to Greece’s stunning 59.1%; but perhaps the most concerning for the broader economies is the fact that Italy’s youth unemployment has now topped that of Portugal at 38.4%. The only nation to see a drop in its youth unemployment was Ireland – which fell back modestly to January levels. Not a rosy picture, but then again, it doesn’t matter…”
Via Zero Hedge
“Yet while the Japanese data was hardly a surprise, the biggest news of the night was European inflation data, which we got shortly after the German March retail sales data (in line with expectations of a -0.3% drop, following the February number which too was revised from +0.4% to -0.3% proving that attempts to stave off recession in Germany have failed) and following Spanish GDP which also came in line with expectations contracting at a -0.5% rate and current account which deteriorated from -€2.6 billion to -€3.9 billion. The April Eurozone CPI reading at 1.2% on expectations of a 1.6% number, and down from 1.7%, which has now pretty much convinced all the analysts that a 25 bps cut in the ECB refi rate, if not deposit, is now merely a formality and will be announced following a unanimous decision. Some, such as Credit Agricole, are even asking for “bolder” action than just the haircut. So will Europe force banks to pledge more assets in exchange for unnecessary money a la LTRO? Or will there be another indirect injection of cash? We will wait and see. In the meantime the EURUSD is where we left it off,
Finally, Eurozone unemployment for March hit yet another record high of 12.1%, up from 12.0%. This was in line with expectations and is hardly news for anyone.
Looking at the US session, we get quarterly employment costs, house prices, consumer confidence and the Chicago PMI. Another busy day.”
Via Zero Hedge
“The next Great Depression is already happening – it just hasn’t reached the United States yet. Things in Europe just continue to get worse and worse, and yet most people in the United States still don’t get it. All the time I have people ask me when the “economic collapse” is going to happen. Well, for ages I have been warning that the next major wave of the ongoing economic collapse would begin in Europe, and that is exactly what is happening. In fact, both Greece and Spain already have levels of unemployment that are greater than anything the U.S. experienced during the Great Depression of the 1930s. Pay close attention to what is happening over there, because it is coming here too. You see, the truth is that Europe is a lot like the United States. We are both drowning in unprecedented levels of debt, and we both have overleveraged banking systems that resemble a house of cards. The reason why the U.S. does not look like Europe yet is because we have thrown all caution to the wind. The Federal Reserve is printing money as if there is no tomorrow and the U.S. government is savagely destroying the future that our children and our grandchildren were supposed to have by stealing more than 100 million dollars from them every single hour of every single day. We have gone “all in” on kicking the can down the road even though it means destroying the future of America. But the alternative scares the living daylights out of our politicians. When nations such as Greece, Spain, Portugal and Italy tried to slow down the rate at which their debts were rising, the results were absolutely devastating. A full-blown economic depression is raging across southern Europe and it is rapidly spreading into northern Europe. Eventually it will spread to the rest of the globe as well.”
Today Spain has reached a record number of unemployed. Although we do not like the current state of things, no one seems to know against whom to direct their anger.
Actually, we are under a dictatorship perhaps worse than the Portuguese or Spanish forty years ago because it is more subtle and works almost invisibly. And we can embody it too, not in an institution or a person, but with a symbol: the euro.
There are many reasons to believe that Spain would not be as bad off out of the single currency. To explore this question we must look at least three things: First, what is the profile of the countries that have left monetary unions? Second, what does empirical evidence tells us regarding effectiveness of countries have left currency unions? Third, what are the economic and social conditions that need to be taken into account in making such a decision?
“Spanish unemployment rose more than economists forecast in the first quarter to the highest in at least 37 years as efforts to tackle the European Union’s biggest budget deficit crimped economic growth.
The number of jobless increased to more than 6 million for the first time, climbing to 27.2 percent of the workforce, compared with 26.02 percent in the previous three months, the National Statistics Institute in Madrid said today. That was more than the 26.5 percent median forecast of eight economists surveyed by Bloomberg News.
Prime Minister Mariano Rajoy will tomorrow unveil measures aimed at halting a six-year economic slump. Spain’s recession dragged into a seventh quarter in the first three months of 2013, leaving the country with more than a fifth of all jobless people in the EU. “
“Don’t Cheer Yet
Spain is contracting less than last quarter, and although unemployment is still rising, it’s also at a less pace than last year. Is this something to cheer about?
Not really. Spain’s budget deficit targets missed by a mile, and had they been closer, everything else would have been worse.
Moreover, while things are getting worse at a decreasing rate in Spain, it’s important to note that things are getting much worse at an increasing pace in Germany. For details, please see Germany Private Sector Output Declines First Time Since November; Eurozone Activity Declines 19th Time in 20 Months.
There is very little to cheer about in the eurozone”