The Greek health system is in the red to a tune of €1.2bn. Astute readers of Dareconomics are already know that the 3rd Greek bailout used troika projections that would enable the country to make it through German elections in September without requiring more assistance:
God bless those wacky Greeks. There is just no sandbagging them. Even though the game was rigged to ensure a quiet summer followed by debt forgiveness in the fall, they have somehow managed to collect less revenues and spend more.
As the government teeters on the edge the public broadcaster’s closure, now would be an inopportune time to ask for more money.
The mainstream media loves its various recovery narratives. If you just read the headline and not the attached article, you would think that the weak is resulting in an export boom. However, that 10% rise in exports was met by an equal 10% rise in imports. Actually, 10% does not equal 10%. The import number was larger to begin with, so equal percentage rises in both areas equates to a record trade deficit for the month of May.
Japan’s hollowed out manufacturing sector is unable to exploit the cheap yen, while the Japanese must pay more for energy. A further drop in the yen will only exacerbate the situation.
Allow me to save you time reading this article. The French Socialists are running out of other Frenchmens’ money to give away, so now they want the German’s. Of course, they do not explicitly say this, because they are politicians but supporting larger budget deficits and Eurobonds is essentially the same thing.
Despite Uncle Ben’s promise to continue printing until the middle of 2014, the markets continue to hold their breath and have their taper tantrum. Observe today’s swoon after the FOMC minutes were released at 2 PM. Perhaps it is time to increase QE to $100bn per month.
Why does the headline reference an easing of the Euro slump? There is no factual basis for this claim. The Eurozone has been in a recession for six quarters, and there is still no indication that the economy is strengthening.
In the short term, the euro will not budge. There are too many technical factors that are contributing to the currency’s tight trading range. Basically, the supply and demand for euros is just about right in the low 1.30’s for now. In the long term, disaster potential rises significantly. Of course, in the long term we are all dead, and I consider that quite the disaster.
The chart above is stale, but it does show the level to which the Chinese key 7-day repurchase rate has spiked. 8% is a high since January of 2012. Since the PBOC refuses to alleviate the liquidity crunch with overnight funds, it must believe that the situation will abate on its own shortly. Let’s hope that they are right.
It looks like the Cypriot bailout is already falling apart. I hate to say I told you so, but savvy readers of this blog have know about this since the middle of April:
We already discussed Greece’s situation and how it may explode before German elections, and now Cyprus will surely meddle with Merkel’s reelection plans.