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In Europe 24th November 2014

The euro area’s deflation inflexion point

LONDON | By Jim McCormick and Keith Parker (Barclays) | At the start of the year, we analyzed the risks of a prolonged bout of deflation in the euro area (Japan-style deflation in Europe getting harder to dismiss). Our broad conclusion was that the risks of deflation in the euro area were probably not materially different from the risks Japan faced in the mid 1990s. Perhaps more important, we felt investors should picture 1996-97 Japan when assessing the risks of euro area deflation today.

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In Europe 21st November 2014

Spain and Portugal are the Eurozone countries at most risk of “prolonged low inflation”

MADRID | The Corner | Internal demand is recovering within the euro area, activity is getting back on track and experts believe that companies are about to start investing, hiring more workers and boosting consumption. However, credit flow, the production gap and unemployment are still major challenges. Analysts at Cortal Consors think that Spain and Portugal are the Eurozone countries most at risk of a “prolonged period of low inflation or mild deflation.”

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In Europe 20th November 2014

Is there (sustainable) growth in Greece?

ATHENS | By Jens Bastian at The Agora | Greece finally exited its six-year long recession in the third quarter of 2014. The Hellenic Statistical Authority ELSTAT said that the economy grew by 0.7 percent in the third quarter (compared to the same quarter in 2013). The positive third quarter reading is the first after 24 consecutive quarters of negative GDP performance dating back to Q3 2008. Still, the economic damage from this recession is staggering. It will take years – perhaps even decades – to bring Greece’s real economy back to the levels last achieved in 2007. 

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In Europe 19th November 2014

The EU is a union of rules, not a union of force

The European Union (EU) is a group of sovereign states, who are sovereign in that they are entirely free to leave the EU. This freedom to leave means the EU is not a “super state.” There is no coercive force — and no EU army — to make Britain or any other country remain in the union. Britain enjoys a freedom, within the EU, that colonies did not enjoy within the British or other European empires. Britain is, therefore, entirely within its rights in considering the option of leaving the EU, although that does not mean such a course would be wise.

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In Europe 19th November 2014

The ECB’s new balance sheet approach

LONDON | By Philippe Gudin and Thomas Harjes (Barclays) | With its policy interest rates virtually at their lower bound, the ECB has begun a transition from a monetary policy framework mainly based on a passive provision of liquidity to the banking system to a more active and controlled management of its balance sheet through asset purchases. 

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In Europe 18th November 2014

Crush the Greeks!

ATHENS | By Yanis Varoufakis via Truman | Tim Geithner is now on the public record, confirming that which we have always known: In February 2010, clueless as to the Euro Crisis that was about to engulf them, Northern European leaders decided to crush Greece. Collectively to punish (against even the Geneva Convention) a nation for having gone bankrupt within a Eurozone whose architecture never took into consideration the possibility that a member-state could become insolvent.

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In Europe 18th November 2014

Italy or France will have to face deep structural reforms

MADRID | The Corner | Markets were sad on Monday until Mario Draghi emerged and spoke his magic words. It seems markets feel more secure every time the president of the ECB takes the lead and assures everything will be alright. Investors felt more confident after his intervention at the European Parliament’s Economic and Financial Committee. However, despite his speech regarding new potential actions in monetary policy, he also highlighted the need of deep structural reforms by the Members States. According to market watchers at Link Securities, sooner or later, “such reforms will have to be faced by Italy or France’s government, because it is necessary to make them competitive and able to grow again.”

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In Europe 13th November 2014

Eurozone crisis is taking its toll on Spain

MADRID | By Francisco López | Spain is not an oasis inside the Eurozone. The 18 main private research services believe that the slowdown in the European economy is already taking its toll on Spain. Besides, they forecast that  Spanish GDP will grow slower than expected in the last quarter of 2014 (0.4%) versus 0.5% of the third quarter or 0.6% of the second quarter.