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Tag Archives: Germany

Drawing The Line (while we can)

What is the economy? It seems as if the word has been turned inside out in the modern world. The Greeks who supplied us with its basis simply put together two others of their own; oikos, meaning house, and nemein, meaning manage. Therefore, oikonomia was the management of one’s own household. Today, “the” economy is far less personal and tangible. To most if not the vast majority, it is an outside view from afar. What’s GDP? How’s the unemployment rate? Someone check the NYSE ticker. These...

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The Shock, The Squeeze, and The Downside

Yesterday, Eurostat confirmed that German GDP in Q2 2019 had contracted. Also issuing benchmark revisions, the European government agency found that GDP growth had been slightly better than previously thought at the top of Reflation #3. The last two quarters of 2017 saw the biggest upward revisions. But if Europe’s “boom” really was a little closer to having been a real one, all that does is magnify the disappointment which has followed. Why didn’t it keep going? Eurostat’s newest benchmark...

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Realism Fights Back After Hope Dominated Yesterday

Overview:  Hope triumphed over realism yesterday, and realism is fighting back toward.  Asia Pacific markets, however, traded on the echo from the recovery in North America on Monday.  The MSCI Asia Pacific recouped part of yesterday's drop, led by Chinese markets.  Hong Kong was the main exception.  The enthusiasm faded by the European morning and the Dow Jones Stoxx is threating a fourth consecutive losing session, dragged down by communication, consumer staples, and health care...

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Japan: Fall Like Germany, Or Give Hope To The Rest of the World?

After trading overnight in Asia, Japan’s government bond market is within a hair’s breadth of setting new record lows. The 10-year JGB is within a basis point and a fraction of one while the 5-year JGB has only 2 bps to reach. It otherwise seems at odds with the mainstream narrative at least where Japan’s economy is concerned. Record lows in Germany, those seem to make sense. By every account, the German economy is in trouble. So obvious, even the notoriously frugal government is floating...

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26/8/19: ifo Survey Shows Increasing Business Concerns in Germany

Ifo Institute's Business Climate indicator for Germany is falling off the cliff: In simple terms, current business situation assessment has now fallen to its lowest reading since March 2015, forward business expectations are the lowest since June 2009, and overall Business Climate index is at its lowest reading since November 2012.August 2019 marks fifth consecutive month of decline in the overall Business Climate index, current Business Situation index, and Business Expectations...

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Germany’s Superstimulus; Or, The Familiar (Dollar) Disorder of Bumbling Failure

The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand. If everyday folks don’t want to spend – because a lot of them can’t – then the government will spend on their behalf. And the central bank...

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A Vicious Cycle Grips Markets

The capital markets are in their own doom loop.  Poor data from  Germany and China, coupled with the escalation of the US-China trade dispute and rising tensions in Hong Kong spur concerns about the risks of a global recession.  Interest rates are driven lower, and curves flatten or go inverted, spurring more concern about the outlook.  The problem is that it is not clear how this vicious cycle ends.   To be sure, the end is conceivable but it seems beyond which the constellation of...

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Europe’s Further Confirmation(s)

The key takeaway from Europe’s economic data dump today isn’t that the whole Continental economy is poised on the verge of recession, though that’s thrust of what’s being written about most. The reason is simple; this is all highly unexpected in the mainstream. Going by official accounts alone, there was never a hint of trouble before just recently. And many still believe this is all just overreacting. Mario Draghi like Jay Powell made his final hawkish move in December 2018. He actually made...

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Negative Is The New Subprime

What is nothing? What comes to mind when you imagine nothing? The moment we try to imagine what nothing is, we fail, because nothing cannot be envisioned. There is nothing to envision or ponder or even think about. Nothing is no thing. Yes, the point above is tedious, but the value of nothing in the financial theater is the latest magic trick of the central bankers and the most vital factor governing all investments. If I invest my hard-earned capital in an asset the guarantees a...

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Why You Should Care Germany More and More Looks Like 2009

What if Germany’s economy falls into recession? Unlike, say, Argentina, you can’t so easily dismiss German struggles as an exclusive product of German factors. One of the most orderly and efficient systems in Europe and all the world, when Germany begins to struggle it raises immediate questions about everywhere else. This was the scenario increasingly considered over the second half of 2018 and the first few months of 2019; whether or not recession. Over the past few months, however, the...

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