Around the Globe 10.04.2013

No Jobs Report Complicates Fed’s Thinking –

Nonfarm Payrolls Through August 2013

The jobs report, among other economic indicators, is merely a pretext for the Federal Reserve to adjust its money printing program.  Flooding the world with dollars has bestowed extraordinary asset prices gains for the well-to-do, but this policy has done little to spur hiring.  The red line on the top of our chart represents healthy job growth for the U.S. economy.  The red line below is the actual performance.  The jobs number is not available due to the shutdown, but is there any number than would prompt the Fed to change tack? A spike upward or downward would just be a blip in a series of disappointing data.

Portugal Recovery Prospects Improve, Lenders Say –

Portuguese Recovery Sampler

A careful reading of the article belies the optimism of the headline.  First, the people predicting that the mighty Atlantic tiger Portugal will stir from its torpor is the troika, the same folks who have predicted the end of Greece’s depression several times and the onset of the Spanish recovery among other fiascoes.

The troika and the mainstream media are confusing the financial picture with the economic situation.  The ECB promise to print to infinity  is keeping Portugal solvent, but the country remains in the midst of depression.  Employment and output continue to shrink, and the government’s outstanding debts swell.

Portugal can recover, but this would require a painful adjustment to its own currency.  Since the political establishment remains slavishly attached to the euro, Portugal has years of high unemployment and economic stagnation in its future.

Netherlands in Budget Stalemate –

Italy and Netherlands Budget Comparison


During the last four years, Italy has posted a smaller deficit than the Netherlands three times with one statistical dead heat.  While this may seem surprising, it is not.  The Netherlands is suffering the aftereffects of its own property bubble and the ongoing competitive disadvantage imposed by its euro membership.  It seems that the ECB’s Teutonic monetary policy does not sit well with the Dutch.  As you can see for yourself, there is an excellent argument for the Netherlands to revert to the Guilder:

Euro Fair Value Netherlands


The euro for the Netherlands is overvalued by over 10% at today’s current rate.

Sarris Says Cyprus Unsure How to Remove Bailout Capital Controls – Bloomberg.

Regulator fines Bank of Cyprus for non-disclosure on Greek debt | Reuters.

Cyprus Bank Deposits


The last country to impose “temporary” capital controls before Cyprus was Iceland, and they are still in place five years later.  Despite Cypriot capital controls, deposits are still fleeing the country.  Meanwhile, regulators have fined Bank of Cyprus and its top officials a total of €460k for losing almost €2bn on nondisclosed holdings of Greek government bonds.  While this amounts to a slap on the wrist, it is one more slap on the wrist that American executive received after the subprime crisis.



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