It's kind of depressing to think of Obama going off to the G-20 meeting after having made a bunch of campaign speeches trying to blame all our problems on Europe. It's gonna be a real lovefest. Just hugs and kisses all around. In the annals of doofus diplomacy, this is a star billing.
Speaking of depressing, have you seen David Rosenberg's 50 odd charts about the general crappiness of the economy? Here they are
Doubling down on depressing, JOLTS for April was released today:
That is not a good sign. And the employment data since confirms a general weakening in employment.
I have spent a lot of time over the last week thinking about Europe's situation. It's rough, to be sure. I don't see much of a way out for several countries. Germany simply doesn't have enough money to cover the holes. They may be able to muddle through with some sort of a dual currency arrangement in a few countries, but what they are doing now is ultimately futile.
So I read some reports, crunch some numbers, watch a few Rammstein videos on Youtube, think about the younger people caught in the mess, and then do it all again.
The German economy looks to be crumpling. The last Bundesbank monthly (not available in English) claimed that things could get better in the second half, but the big fold up in construction PMI
tells me that it won't. The fact that the weakness was centered in new orders indicates that this has legs. The Germans have an additional problem in that they need to raise electricity prices (the funding for solar feed-in tariffs). To keep that down to a reasonable level, they need to cut feed-in tariffs again. The German parliament won't do it.
The poor Spaniards borrowed short-term for 5%
. They're not open for funding, really. The Euro bank bailout deal has to be changed to make Spanish government bonds FIRST in line, not second. If that is done, maybe the Spanish government can access funding at a more reasonable cost. Maybe. It depends on the details. The ECB can essentially throw more money at the banks. But do they have collateral?
. There is nothing like sunlight on signature loans for housing loans to people who no longer are living in the housing to create a Euroerdä
Italy is still the big mammoth in the Euroraum. That big pile of something in the center of the Euroraum is not a Yoko Ono art exhibit
. Oh no. Italy borrowed three years at 5%, and the three year bond
is holding close to 5%. No way is that workable with debt over 120% of GDP, and a contracting GDP.
What I have on the US shows that we are still skipping, but that we could shortly hear the last "plop". Food costs are too high for the gas prices to kick in much in the way of impetus. Weakness keeps extending upwards through the income ladder. We're very close to snowballing on the weakness.