Death Star Economics



Act four: falling action (August)

August is the month where the world goes on holiday and the rest of it grows very quiet. So quiet in fact, that the lead volatility index hit its lowest levels since summer 2007 (for 1-week and 3-month volatility). Naturally, we can’t enjoy this. Because it’s either the calm before the storm that is looming when the troika returns to Greece in September [Greece will not explode upon the repayment of €3.1bn to the ECB on 20 August, by the way.], or its boring us because we got too used to apocalyptic news. Also a nice way of putting it is this:

The market these days resembles one of those old World War II movies, the silent moment before the battle, when some buck private leans over and whispers “It’s quiet out there, Sarge,” and the grizzled veteran, eyes firmly on the battlefield, says “too quiet.”

GDP digest:

German provisional Q2 GDP showed an expansion of the economy by 0.3%.

France isn’t seeing any growth – and that’s mostly because a slight increase in baguette exports and investments have kept the economy from contracting.

Overall, the eurozone contracted 0.2% in Q2, something that shouldn’t come as a surprise. With the unimpressive German performance, this may get worse in Q3.

And in terms of policy that could mitigate the crisis or even attempt that sort of ‘decisive action’ demanded all around, there are new problems as well. The ESM, European Stability Mechanism, which still has not been entirely ratified and the implementation manual of which isn’t ready yet, has been questioned in the German Constitutional Court – again. And this time it might even get to the ECJ, the European Court of Justice, delaying the fixing of Europe by roughly a century. The first case brought about against the ESM is meant to see a preliminary ruling on 12 September.  read article

News and analysis regarding the Olympics has a strange cyclicality to it. Beginning with the ‘economically valuable or not’ back and forth, leading to the never ending forecasting of a public transport Armageddon in London, followed by a deserted city and only a modest increase in travellers on the tube, we’re now back to talking about profits; the International Olympic Committee is estimating profits worth $7bn from the games overall. According to today’s news, the score is as follows: The UK got the worst deal out of it and will be stuck in recession until 2020 (especially now that inflation rose again and cucumbers will be back at £1 in no time), while athletes are becoming millionaires by selling their souls to multinational brands.

So long.

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