Across the pond things are getting more and more dicey
by digby
Joe Weisenthal reports that the Cyprus “solution” that didn’t come to pass last week might end up being even worse than we thought.
What’s wild is that a week ago, Cyprus probably could have passed a bill that taxed depositors above 100K at 12-15 percent, while sparing insured depositors, and although that would have been painful, it would have been over. Now we’re talking about capital controls and the threat of a complete wipeout of depositors.
But that’s just a smallpart of the problem evidently. There’s a bigger crisis on the horizon:
Europe has a problem on its hands that’s bigger than Cyprus: The economy stinks.
This week we got fresh proof that things are bad or getting worse.
In France, the Flash PMI report (which is a mid-month look at the combined services and manufacturing sectors of the economy) came in dismal, with the output index falling to a four year low.
Meanwhile, Germany’s economy is the envy of Europe, but even they are not immune to trouble. You can see its Flash PMI jutted lower this week as well.
Meanwhile, the horror show in Italy and Spain continues unabated.
This week, Danske Bank economist Frank Øland Hansen warned that France was beginning to look more like a peripheral country than a core one.
Not only is the economy sinking, but from a labor cost/competitiveness standpoint, it’s looking PIIGSish.
Not only is the European economy a mess, and the second biggest country looking more and more peripheral, there isn’t much action being taken to address any of it.
Cyprus hasn’t made a dent in markets, and it might not. On the other hand, all of the above is a crisis.
The good news is that the US has backed itself into austerity as well so we’re probably going to go the same way.
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