Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Risks Out There 05 (Feb 17 - Dec 18)

Postby behappyalways » Wed Feb 14, 2018 5:19 pm

Don't Be Complacent About Italy's Elections
https://www.bloomberg.com/view/articles ... -elections
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby behappyalways » Sat Mar 03, 2018 8:55 pm

Italy goes to the polls with bleak electoral prospects

The world’s eighth-largest economy faces a woeful set of choices

TO HEAR Italy’s politicians tell it, the country is, if not quite out of the woods, then at least emerging into an unexpected clearing, blinking gratefully. Growth has returned, exports are up, some of the weakest banks have been repaired and even the migration crisis seems to be under control, thanks to a deal with Libya’s warlords.

Emboldened, the aspirants are outbidding each other to promise gifts to voters. Benefits will rise, taxes will fall and jobs will soon return.

Sadly, things are not quite so rosy. The deal with Libya is precarious, to say the least. Although the economy is expanding again, its recovery is much weaker than that of the other big euro-area economies.

Output growth of 1.7% a year trails the euro-zone average by a full percentage point. Unemployment is still over 10%, and far worse among young people. Banks are sitting on large portfolios of non-performing loans. At around 130% of GDP, Italy’s public-sector debt is still a huge burden, even as quantitative easing by the European Central Bank, which kept interest rates low, is coming to an end.

The country is in poor shape to withstand the next downturn. Responsible, reforming government is as badly needed as ever.

Alas, Italy is unlikely to get it on March 4th. The election that day is being fought using a new system that combines proportional representation with first-past-the-post contests in almost 40% of the seats (see article). Predictions are hard, but the signs point to a hung parliament, followed by a period of dealmaking, with a risk of things going seriously wrong.

Most seats will probably go to an unsavoury right-wing coalition that consists of Forza Italia, led by a convicted fraudster, Silvio Berlusconi; the anti-EU and anti-immigrant Northern League; and a hard-right outfit called the Brothers of Italy. Fortunately, Mr Berlusconi cannot be prime minister. Because of his conviction he is barred from parliament, at least until next year.

If the League wins more seats than Forza (polls have them near-tied), it will be the one pushing for the top job anyway. An administration led by its boss, Matteo Salvini, would spook markets and investors: he once described the euro as a “crime against humanity”, and favours (as does Mr Berlusconi) a flat tax which would hit revenues hard.

The party is soft-pedalling its traditional demand for northern separatism. It is now more of a far-right national party (allied with the National Front in France). The coalition, however, looks likely to come up short.

That might be either a relief or awful. A relief, because neither the 81-year-old Mr Berlusconi nor Mr Salvini is fit to lead Italy; awful because there is a small chance that Mr Salvini might in that case be tempted to throw in his lot with the Five Star Movement (M5S), another populist outfit that is led by a 31-year-old with no experience of running anything apart from a website.

The most popular party in Italy, M5S is chiefly a protest movement. It has toned down its anti-Europeanism but has few credible policies and no ideological underpinning. The role of its founder and self-styled “guarantor”, a comedian named Beppe Grillo, remains a mystery.

It has to be the Democrats

If The Economist had a vote, we would reject those woeful options and plump instead for continued government by the left-of-centre Democratic Party (PD). Under it, the country has at least been sensibly managed, and its “jobs act” introduced a few reforms into a system that still over-protects those with permanent jobs, encouraging companies to hire young people only on short-term contracts.

However, the polls suggest that the voters, tired of years of austerity and PD infighting, will punish it at the polls. Barring a surprise, it will not be able to govern on its own.

Italy is hopelessly stuck. The least bad way forward would be another “government of the president”, a broad coalition underwritten by Sergio Mattarella, the head of state. For all the flaws of such a system, it has allowed Italy to muddle along since Mr Berlusconi stepped down at the height of the debt crisis in 2011.

The current prime minister, Paolo Gentiloni of the PD, has been in office for just over a year, but has already shown the diplomatic skill to manage such an unwieldy beast. In Pier Carlo Padoan, Italy has been fortunate to have an astute finance minister who understands the need for fiscal discipline and reform. For Italy’s sake, both of them deserve to stay in charge.

Source: The Economist
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby winston » Mon Mar 26, 2018 9:01 pm

Greece could create new market shocks as banks face critical test

The four banks have come a long way since 2015, when they were last tested. Since then, they raised nearly 15 billion euros ($18.55 billion) in new capital.

There's still a "huge problem" with bad loans, according to Daniele Nouy, chair of the ECB's supervisory board.

by Silvia Amaro

"At close to 50 percent, Greece has the highest ratio of non-performing loans in the euro area. And this is a huge problem."

Italy's is at 12%.




Source: CNBC

https://www.cnbc.com/2018/03/26/greece- ... yptr=yahoo
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby behappyalways » Fri Apr 27, 2018 9:22 pm

Catching a cold

The euro area’s economy loses momentum

The best of the zone’s growth spurt may already have passed


ECONOMISTS have spent the past decade wringing their hands over the health of the euro area’s economy. Last year, in a welcome respite, it expanded by a robust 2.3%, outstripping forecasts and matching America’s growth rate. But it has appeared less rosy-cheeked since.

Symptoms include moderation in a number of monthly indicators. Industrial production fell in January and February, as did business confidence; retail-sales growth was disappointing. The purchasing managers’ index (PMI), an output survey regarded as a good early indicator of GDP growth, has fallen from exuberant—and perhaps unsustainable—levels at the turn of the year, though it still points to decent growth (see chart).

Germany, the bloc’s largest economy, has not been immune. A summary indicator compiled by the Macroeconomic Policy Institute, a German think-tank, which includes production, sentiment and interest-rate data, suggests that the probability of a recession has risen, from 7% in March to 32% in April. A measure of economic sentiment based on a survey of participants in financial markets by the Centre for European Economic Research (ZEW), another German institute, has fallen sharply.

Many analysts think that at least part of the explanation could be a range of temporary factors, the equivalent of a sniffle rather than a severe infection. A cold, elongated winter across the continent, and a nasty outbreak of flu in Germany, may have depressed production and kept shoppers at home.

Some German output was probably lost in February, when members of IG Metall, a large trade union for industrial workers, went on strike. But if this told the whole story, the euro area’s economy should be bouncing back by now. Although the whole zone’s PMI stabilised in April, some surveys in Germany and France dipped a little further.

Demand may have been weighed down by other factors. The waning impact of the European Central Bank’s (ECB) quantitative-easing programme could be a candidate. But the central bank’s regular survey of banks suggests that its accommodative monetary-policy stance continued to translate into looser credit conditions over the past six months.

Another candidate is the stronger euro, which may have held back exports. Although much of its rise took place last year, economists at HSBC, a bank, point out that currency changes typically feed through to the trade figures with a lag. Consistent with that, the zone’s exports fell in February; sharp falls in the PMI measure of manufacturing-export orders also point to a loss in momentum.

Barring further strength in the currency, this too should eventually pass. A complication, though, is the risk of a trade war, given the importance of exports for the euro area, and particularly Germany. The fear of protectionism could explain why some forward-looking indicators of sentiment have turned down, says Achim Wambach of the ZEW, though it is unlikely to have affected the hard data yet.

The ECB, which was meeting to discuss monetary policy as The Economist went to press on April 26th, will be watching closely for signs of more persistent weakness. One risk is that the slowdown indicates less spare capacity in the economy than expected, with less room for above-trend growth. But with inflationary pressure still subdued across the euro zone, policymakers may not be too exercised.

That said, the cyclical peak in growth may be past. As spare capacity is used up, most forecasters expect growth in the zone to slow gradually over the coming years, towards its long-run potential rate.

And here a more chronic problem surfaces. In its World Economic Outlook, released last week, the IMF opined that medium-term growth in the single-currency bloc was likely to be only 1.4%, “held back by low productivity amid weak reform efforts and unfavourable demographics”. The hand-wringing continues.

Source: The Economist
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby winston » Tue May 01, 2018 7:47 am

Europe’s financial position is still perilous years after the debt crisis

David Brown says the apparent stability of the European Union masks the heavy debt levels of its member countries, which were only propped up by decisive action from Germany and the ECB that may not be there next time around

Under the surface, Europe is still a mess. Too much has been swept under the carpet without tackling deep-rooted problems.

It means underlying financial instability will return to haunt the euro with a vengeance at some stage in future.


Source: SCMP

http://www.scmp.com/comment/insight-opi ... after-debt
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby behappyalways » Tue May 15, 2018 10:25 am

Eurozone economic slowdown might not be a blip, ECB chief economist fears
https://www.telegraph.co.uk/business/20 ... economist/
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby winston » Wed May 23, 2018 9:12 am

7 Reasons Why European Banks Are In Trouble

The Eurosystems´and euro banks´ balance sheets totaled €30 trillion in January 2018, that is about 291 percent of GDP.

European banks are in trouble for several reasons.

First, banking regulation has become tighter after the financial crisis.

Second, there are risks hidden in banks´ balance sheets.

Third, low interest rates have contributed to increasing asset prices.

Fourth, according to the ECB non-performing loans (NPLs), i.e. loans where borrowers have fallen behind in their payments, amount to €759 bn., that is 30% of the banks´ equity.

Fifth, more trouble for banks lies ahead.

Sixth, lower interest rates have posed severe problems to banks´net interest margin.

Seventh, banks in the Eurozone are still connected closely to their government.

Source: Zero Hedge

http://investingchannel.com/article/459 ... wS-j0iFOM8
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby winston » Sat Jun 09, 2018 7:07 am

Will Italy and its ailing banks trigger the next global financial crisis?

Nicholas Spiro says populism in Italy, vulnerable European banks and a tightening of monetary policy could tip financial markets into crisis

European banks remain saddled with non-performing loans (NPL) worth around €1 trillion (US$1.17 trillion) and have been forced to grapple with negative interest rates, which have eroded their already weak profitability.

More than €170 billion in bad loans in Italy.


Source: SCMP

http://www.scmp.com/comment/insight-opi ... ext-global
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby behappyalways » Wed Jun 13, 2018 10:24 am

2018.06.03【文茜世界財經週報】如歌劇迭起的政局 義大利民粹政黨勝出
https://www.youtube.com/watch?v=b9pAp5k ... 0s&index=8
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Re: Europe - Economic Data & News 13 (Dec 16 - Dec 18)

Postby behappyalways » Wed Jun 13, 2018 11:05 am

Macedonia and Greece: Deal after 27-year row over a name
https://www.bbc.com/news/world-europe-44401643
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