EU Economy: Draghi’s EU bond bailout kindness ends up biting him - by Eric Reguly

Samuel Johnson’s droll remark – “when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully” – could have applied to the euro zone before the European Central Bank (ECB) launched its save-Europe mission.

Between 2009 and mid-2012, European economies were unravelling at an alarming pace. Three of them – Greece, Ireland, Spain – were kept alive by international bailouts; a fourth, Spain, received a backdoor bailout in the form of a bank rescue. The governments of those countries went into panic mode. Banking systems were propped up and overhauled, budgets were cut with alacrity, market and labour reforms were put in place.

The widespread strikes, demonstrations and riots from Athens to Barcelona were grim evidence of the pain suffered by everyone.

Today, the vaunted euro zone “recovery” is not worthy of the name. Fresh data released this week put Italy back into recession, with back-to-back quarterly contractions. France is flat-lining and in danger of slipping back into recession, too. German industrial production is on the wane, suggesting that the country’s second quarter will show no growth.

The International Monetary Fund predicted last month that the 28-country euro zone would grow by a mere 1.1 per cent this year. With Italy back in recession and disinflation threatening to turn into outright deflation – the euro zone’s July inflation figure was only 0.4 per cent – all bets are off for an economic rebound that will create jobs and bring down crushing national debt levels. On Thursday, after the ECB’s rate-setting meeting, Mr. Draghi said the recovery remained “weak, fragile and uneven.”

What went wrong? To be fair to Mr. Draghi, the poor man has used every monthly policy meeting since 2012 as a platform to beg governments not to give up on austerity and economic reforms. It hasn’t worked.

Read more: Draghi’s EU bond bailout kindness ends up biting him - The Globe and Mail

EU-Economy: Quantitative easing: ECB getting closer to US Fed-style stimulus ( Lets hope not) - by David McHugh

The European Central Bank has deployed a raft of aggressive measures to boost Europe's economy, but stopped short of the one many economists insist would do the most to help: large-scale purchases of bonds.

That could change sooner rather than later, analysts say, if inflation remains low.

Purchases of bonds using newly created money — called quantitative easing — have been used with some success so far by the U.S. Federal Reserve, the Bank of England and the Bank of Japan. They can reduce market interest rates, making it cheaper for consumers and businesses to borrow, helping growth.

So why not in Europe?

To begin with, the ECB faces technical and practical challenges that other major central banks don't have. It has 18 different government bond markets, raising the question of whose bonds to buy and how many.

Beyond that, creating new money has long faced resistance in Germany, the biggest economy in Europe where central bank stimulus measures are looked upon with suspicion and have a prominent place in public discussions.

But after Thursday's meeting, things could be shifting.

At a press conference on Thursday, ECB President Mario Draghi held the door open to such bond purchases, suggesting Germany has at least softened its outright resistance. If inflation falls further, analysts think the ECB could start quantitative easing.

"Are we finished?" he said after the decision. "The answer is no." The ECB is keen to bring up the inflation rate, which at 0.5 percent is so low it raises fears the eurozone will fall into outright deflation, a crippling downward price spiral.

Note EU-Digest:  quantitative easing is the kiss of death for an economy and even though it creates some relief at first it will eventually come and haunt you, as the US is experiencing, but not speaking about. 

Read more: FRANKFURT, Germany: ECB getting closer to Fed-style stimulus - Business Breaking News - MiamiHerald.co

Global Economy: DEBT MASQUERADING AS GROWTH!

The market Oracle reports: "The greatest economic, political and societal collapse in recorded history is unfolding and has been doing so ever since the final denouement of partially sound money occurred at Bretton Woods II in August 1971 – thereby allowing governments, the financial systems and elites to substitute money printed out of thin air and politically correct/corrupt legislation for sound economic policies.  This process has been unfolding for 40 years and is nearing its demise.  

Growth now is a function of expanding credit, financing government and consumer consumption and calling it GDP.  The developed world has become Something for nothing societies are like locusts they eat everything right down to its roots, including next year’s seed corn.  They will issue debt until it no longer can be sold. 

They will print money until it is no longer accepted.  This process is well established and underway (think Venezuela, Greece, Argentina, this is the future).  To illustrate the LACK of GROWTH, look at this chart of GDP from Chris Wood at CLSA and subtract the deficit:

Most economists are PREDICTING accelerating GDP growth in 2014; you sure wouldn’t come to that conclusion based upon median family incomes since 2008;  

Or the crash in PERSONAL incomes over the last year  

As you can see, the only period that compares to this CURRENT CRASH in disposable income in the last 20 years was the crash of 2007-2009.  Do you think this reflects a robust economy in 2014 as predicted by the MSM and Keynesians?  To grow the economy, we must borrow money to finance spending and report it as GDP.  DEBT MASQUERADING as GROWTH! 

Now, the developed world’s economies have been hollowed out (by runaway regulation, taxes and crony capitalism) and much of the wealth creation occurs in the emerging world.  Crony capitalists and their minions in government just attack the private sector where future growth and productivity must come from. 
 
They carve it up and destroy the future creative destruction (aka “Capitalism”) which must occur for growing middle classes and economies.  The powers that be are MINTING fire hoses of NEW money, creating at least 8000 million dollars/yen a DAY (2 million million a year or 2+ trillion per year) to support the global economy, bankrupt sovereigns and financial systems.   

Very little BAD can happen when they are printing and injecting this amount of money into the financial system and government coffers on a daily/yearly basis. “Currencies don’t float they just SINK at different rates”

Asset-backed economies provide the ILLUSION of growth in the developed world driven by currency depreciation (ASSET prices rise/reprice as the purchasing power of the currency they are denominated in sinks) and never-ending leverage to fund consumption and HIGHER ASSET prices.  This is insane behavior, but now is the last refuge of the powers that be.
 
Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule." 

EU-Digest

Euro zone morale reaches two-year high in September but mood in the Netherlands worsened by 0.9 points - by Martin Santa

Optimism in the euro zone's economy brightened for the fifth month running and hit a 2-year high in September, driven by improving confidence across all sectors and confirming that a recovery is underway.

The European Commission said on Friday the 17-nation bloc's morale rose faster than expected to 96.9 from 95.3 in August, the best reading since August 2011.

In the wider European Union, confidence was up by 2.4 points to 100.6 points, taking the indicator above its long-term average for the first time since July 2011.

In the euro zone, the positive trend was particularly strong in three out of the bloc's five largest economies, with Spain and Italy rising by 2.5 points and France up by 1.6 points.

Sentiment in Germany, Europe's biggest economy, was broadly unchanged, while the mood in the Netherlands worsened by 0.9 points in September.

Across the bloc, employment plans were revised upwards in industry, services, retail trade and construction, the European Commission said.

Read more; Euro zone morale reaches two-year high in September | Fox Business