Greek unemployment hit 27% across the board with youth unemployment reaching 64.2%. Nearly two-thirds of Greeks under the age of 25 cannot find work. Of course, the Greek finance minister has a job, and he is very busy proclaiming that Greek economic growth will resume in 2014 in interviews on state television.
Three months ago, he promised a recovery beginning at the end of this year in the Bloomberg article linked above, but the march of time has forced him to alter the trajectory of the Greek boom. Growth is always just around the corner in these eurocrisis countries, and I am sure that Greece is slowly morphing into a Mediterranean tiger as we speak.
Perhaps, Greece’s slow-burning civil war will come to end as the economy grows, so the mainstream media has can stop not reporting it.
The Wall Street marketing language for junk bonds is “high yield bonds.” A yield-to-maturity less than 5% does not appear to be high to me, so I propose that Wall Street be forced to resume using the term junk bonds. At least Main Street will know what it’s getting into with the improved nomenclature. If and when junk bonds return to their historical average yield of close to 10%, people will lose half of their principal, and that is why the Fed will not return to a tightening bias.
Believe it or not, Spanish sovereign bond yields still have room to fall. As long as the money printing continues, the excess cash will be stashed somewhere. The current spread between bunds and bonos is about 270 basis points. If the bund bottoms out at .5%, we will see a 3.2% yield for SSBs.
The yield may even fall further if the ECB joins the party with the same gusto as the Fed, BoJ and BoE.
We discussed the Asian currency situation earlier in the week. 60% of South Korea’s GDP derives from exports. As Japan weakens the yen, South Korea must keep pace in order to maintain its competitiveness. BTW, do you know which country is the greatest currency manipulator since the breakdown of Bretton Woods? The answer is in this chart:
Unfortunately for people in the real world, the labor market is not strengthening. Employers have stopped laying people off, because they have cut labor expenses to the bone. This is good news but not a recovering labor market. The bleeding has stopped, but the patient is still in bad condition.
What is needed to create jobs is a sustained growth rate of 4-5%. Until this happens, the labor market will remain stagnant.