Death Star Economics



World economy is closed until further notice…

… apologies for any inconvenience caused.

Economic data from China and Japan show that things keep pointing down – though ‘down’ is a relative direction in the case of China as it really means the country grew at a slower pace and indicating that economic growth fell below 8% in Q2. Yet, both China’s PMI and Japan’s manufacturing index performed better than expected. US manufacturing data is due later in the day.

Eurozone unemployment has risen to 11.1%, its highest levels since records started in 1995 and 0.1% higher than in May. Spain is still leading the picture with more than 24%, followed by Greece with almost 22% and Portugal with 15%. Continuing with bad news, Finland and the Netherlands have declared to veto those undefined procedures leaders “agreed” on last week that would depress Italy’s and Spain’s borrowing rates. This regards the purchasing of bonds in the secondary market through both the EFSF and the ESM – the latte of which needs unanimous support from EU leaders. Square one.

But if you want to believe the Wall Street Journal, all of this will lose its relevance in exchange for new drama:

With government policy playing a greater-than-usual role in driving financial markets, investors are nervously eyeing the November U.S. presidential election and the year-end expiration of tax cuts and economic stimulus that could drive the U.S. economy into recession should Congress fail to step in.

So to sum up, Europe is closed until further notice, China’s clockwork is slowing down and the US is collectively scared of whatever there is to come in November. Q3 is going to be fun.

Surprisingly, a European authority is taking the side of the financial services industry for once: ESMA, the European Securities and Markets Authority, has launched an inquiry into how S&P, Moody’s and Fitch evaluate banks’ credit ratingsread article

Otherwise, Marcus Agius stepped down as chairman of Barclays, as a response to the Libor manipulation scandal that erupted last week. Here’s his comment on his departure. In a weird sort of defence of Barclays and a show-off of white-collar-crime-and-got-away-with-it, the Telegraph printed the holy grail of anecdotal evidence: an anonymous “insider from one of Britain’s biggest lenders” talking about how he used to manipulate the lending rate all the time… read article

And linking back to last week, remember how I said, half-seriously, I expected Citigroup and Nomura to join the bad-PR party of all those other banks drenched in scandal? Well, here you go, embezzlement (Citigroup) and insider trading (Nomura).

So long.


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3 Responses

  1. princess1960 says:

    so we are Monday .+1 ..thank you for the article
    CHine ….is not good (and i dont know why there say is grow )
    Japan is allways my prefere country every thing is precise and fast for one investor ..
    Finland and Holland is to country with good working GV ,,but this crisis tuch tham ..(is very logic)
    Citigrup is the biger bank in world and now i have to concentrate here because after L Brother all the system bankare is shaked..for good i know CG IS INBIG PROBLEM .
    unemployment in USA nothing from other peaces continent ..
    US PRESIDENTIAL is one proces have to do every 4 year (constitution)..B.Obama is better than ROMNEY …..FOR THE TIME …maybe you dont like what i say but i am one 3 person with out intreses from noone party and i see with my clear optical —-minde diffrent from othere intreses and fanticisme .

    really long…but no matter ….

  2. […] Mario Draghi, head of the Bank will hold a press conference after the announcement, at which he is expected to discuss the future of the EFSF bond buying program. That could put more pressure on the ratification process of the ESM throughout Europe. As a reminder, the Germans pulled the case in front of their supreme court, while the Dutch and Finish said they would veto the ESM’s proposed use. […]

  3. […] in Japan, Nomura’s CEO Kenichi Watanabe and COO Takumi Shibata resigned, following the insider trading scandal that broke early this month, with the former being replaced by CIO Koji Nagai. According to Reuters, this is the third insider […]

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