And not only no change in fiscal policy, but more of same. As the carpenter said about his piece of wood, ‘no matter how much I cut off it’s still too short.’

Fertile ground for the ‘bond tax’ (PSI) for the next round of austerity, to reduce the need to further cut public services and raise domestic taxes.

Karim writes:

As mentioned before, PMI surveys in Europe are the most timely and important economic data point for the ECB; they have the greatest weight in the ECB’s model of estimating current quarter and quarter ahead growth.

Today’s data was weaker across the board, with Germany surprisingly weak in particular.

  • Euro composite PMI fell for the second month in a row, from 49.3 to 48.7
  • Weakness was led by manufacturing, down from 49 to 47.7
  • German manufacturing was especially weak, falling from 50.2 to 48.1
  • French PMI slipped back below 50, from 50.2 to 49

The impact on GDP according to NowCasting (which uses a similar framework as the ECB) was a downward revision to Q2 real GDP growth from +0.6% (annualized) to -0.6% (annualized) for the EuroZone, and from 0.1% (annualized) to -1.2% (annualized) for Germany.

This data should certainly push up the probability of an ECB policy rate cut in May or June.

12 Responses

    1. @Dave Begotka,

      Then I cut my thumb off, and there’s blood everywhere. My spouse is mad about the expense, & the bill for the ambulance … plus, my insurance rates are going up.

      Conclusion: be more careful where I cut.

      Spouse, ambulance driver, insurance agent. Anyone else?

      How far can boardumb be extended before he walks the plank?

  1. I guess Europe is counting on other countries in the world to recover and then keep importing European production. US, Japan, China…
    But China also depends on exports, unless they are serious about increasing their domestic demand. Japan also is exporting economy, and it does not seem like they are prepared to run deficits to accommodate imports.
    So it is up to US to save Europe. Unless US also decides to start cutting deficits.

    1. @Gary,

      “The Irish government also secured a loan from the UK.”

      Republic of Ireland falls back into recession ..
      because an export drive was undermined by the slowdown in global demand.

      If all they’re lacking is demand, why not create some of their own?

      Instead, we have lemmings accelerating a cliff drive? How’d they ever get a license? Maybe they hope to land in someone else’s demand.

      1. @roger erickson,

        that’s their problem – they cannot create their own demand, unless ECB and European top politicians allow it – and they don’t.

        Although Spain did dare to increase their projected deficits.

      2. @Gary, they could by other means, if they would only recognize & explore their options
        issue their own currency
        use mosler bonds
        use tax-credit bonds; etc, etc

        It’s not the options they’re short of, it’s their ability to explore them with agility. They’re taking “No” for an answer when they shouldn’t even be asking.

      3. @Roger Erickson,

        now you are talking about brave and selfless politicians, who are focused on improving living conditions of their constituency using methods that their constituency would not understand and would likely oppose (own currency)…

  2. There’s been a lot of press about the inability to recognize faces
    , how it’s becoming more common, and can be inherited.

    Maybe the recurring outbreak of Deficit Terrorism is simply inability to recognize the obvious. Athwapathagnosia = Inability to see innocent fraud.

    Inherited from bankers, or economists, or a “recessive” meme deadly only with cultural inbreeding?

  3. There are other physiological parallels.

    Schizophrenia = two party system, at civil war; instead of in coordinated balance that produces more than the sum of it’s parts.

    Autism = when group attention-weighting is clumsily fixated on specific channels, not able to follow net outcomes with agility.

    We know what developmental disturbances can cause schizoid/autistic limitations in individual nervous systems.

    Do we know what cultural redevelopment failures cause cultural/economic schizoid/autistic limitations?
    We better find out, and limit those triggering events.

    Our training & education programs once turned out people who could write constitutions and coordinate to overcome any & all challenges. Now we’re churning out voters & politicians who can unknowingly write national suicide pacts. There is a better way, obviously. We’re simply not letting the obvious happen.

  4. Imagine making an engine more efficient by draining out the oil.

    I suspect the word ‘cut’ generates a false model. ‘Cut’ appeals to the exclusive mindset, but trade and exchange are not only dynamic, but a mutual endeavor.

  5. Good post. I learn something totally new and challenging on blogs I stumbleupon on
    a daily basis. It’s always interesting to read through articles from other authors and practice a little something from their sites.

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