The various Greek bailouts have not been engineered with Greece in mind. Rather, each iteration’s purpose has been to kick the can past German elections. The not-so-secret deal between Greece and the troika is for the Greeks to keep a lid on things until after September 22 in exchange for debt forgiveness when extra bailout money becomes necessary. According to the article, Greece has financing until August of 2014, but I would be surprised if it does not require more aid this winter. A hole has already opened up in the 2013 budget due to the health service running a €1.3bn deficit.
Large profits belie the real story in banking: the slowing world economy is decreasing revenues. Money printing can raise asset prices and provide firms with money to buy back their shares to improve profit optics, but it cannot create sustained, organic growth. HSBC is a large player in emerging markets, and its performance shows the increasing economic headwinds in that sector.
The Aussies have joined the nascent currency war with remarks by a key minister. Kim Carr, Labor’s Industry Minister, criticized Asian country’s currency manipulation making indirect comments about Japan’s loose monetary policy. The chart above illustrates the contraction of Australia’s manufacturing sector, and the chart below shows the rise and fall of the Aussie over the last five years. As you can see, an exchange rate of .65 USD/AUD is not out of the question particularly with considering China’s troubles.
The mainstream media is sticking to its recovery narrative. Every piece of economic data hails a strengthening recovery that seems never to arrive. While the services PMI did surge in July, this surge has happened at least three times since the economy hit bottom. Rather than accelerating to take-off speed, the economy continues to muddle with tepid growth rates around 2%, around half the necessary clip for the significant job creation.
Over four years since the economy bottomed out, we have only replaced about three quarters of the jobs we lost during the recession. Moreover, we have failed to create another three million jobs for people entering the workforce leaving us millions of jobs short at this juncture. What jobs being created are low-quality positions paying low wages with no benefits. Money printing helps Wall Street at the expense of keeping down Main Street.