The tale of two Europe’s continue

By Peter Boockvar - December 17th, 2010, 9:57AM

The tale of two cities theme continues in Europe. As Germany reported that their Dec IFO business confidence figure rose to a record high dating back to ’91 and French business confidence rose to the highest since June ’08, Moody’s downgrades Ireland by 5 notches to Baa1. Now Moody’s is not some soothsayer here as their rating now is only in line with Fitch (and 2 below S&P) and the markets have priced in these lower ratings but they do highlight that Ireland and others in the developed world continue to suffer from too much debt and not enough growth. On the 2nd day of the EU summit, the EFSF bailout fund will likely become a permanent fixture with the details to be worked out later. Elsewhere, UK consumer confidence fell to the lowest since Feb ’09 while Brazil’s unemployment rate fell to 5.7% from 6.1% to the lowest since at least ’01.

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Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

One Response to “The tale of two Europe’s continue”

RodgerMitchell Says:
December 18th, 2010 at 2:09 pm
Consumer confidence does not necessarily = economic health. Germany, France and Ireland all are Monetarily Non-sovereign. Having adopted the euro, they surrendered their unlimited sovereign power to create money. Thus, unless they receive a flow of money from outside their borders, they can go bankrupt.
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France and Ireland have a negative balance of payments. Money is leaving their countries, which means unless some way is found to add money, these nations will not be able to pay their bills. Germany has a positive balance of payments, so this increase in money allows it to pay its bills.
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The U.K. did not adopt the euro and so, retained its Monetary Sovereignty. (http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/) Monetary Sovereign nations have the unlimited ability to create their sovereign money. They never need to run positive balance of payments and never can have difficulty paying their bills.
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All the nations that adopted the euro stand on a wobbling tight wire. Not being able to increase their money supply, they remain in constant danger of bankruptcy. That is the fallacy of the euro.
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Rodger Malcolm Mitchell