Another glimmer of hope in a June number that deficits are sufficient for stability:
Italian Business Confidence Unexpectedly Rises to 88.9 in June
June 27 (Bloomberg) — Italian business confidence unexpectedly rose in June from the lowest level in almost three years. The manufacturing-sentiment index rose to 88.9, from a revised 86.6 in May, the lowest since August 2009, Istat said. Istat originally reported a May reading of 86.2.
Deficits are sufficient for stability but the cost of deficit financing seems too high to allow it to last.
only two things actually matter. will they keep the banks open for business-seems yes. and will the govs like italy make their payments on a timely basis- seems even greece is currently doing that. that’s all the private sector needs to muddle through at current type levels.
But what happens when they hit turn 4?
I don’t have much confidence in confidence indices.
A stabilized wreck is nothing to be proud of. Just means the fire truck & ambulance may leave the scene.
All depends on what they’re referencing their Output Gap to. Just like before, Greece falls first, then Germans eventually sack Rome.
Warren Mosler: “Until they all get ‘in paradigm’ the 99% [still] don’t have a chance.”
Probably more to good with football (the real one) than economics
WHAT IF …
(I may be obviously absolutely wrong in what I have written below)
What if the game played by Merkel and the others like Van Rompuy is not about throttling Greeks and suppressing Spanish / German workers etc. but about eliminating the so-called global (American) financial institutions (banks and investment/hedge funds) from Europe?
The real enemy is Wall Street and George Soros not these little tax dodgers hiding on the streets of Athens.
This would be the only plausible explanation why she (and her “ordoliberal” comrades like Schauble) insist on bondholders haircuts.
They want the “international speculators” (investors and savers) to be punished for investing in Europe and to go away. Then the last act of German reunification and final cleanup after WW2 and Marshall Plan can happen – the Americans will no longer be able to meddle in the economic affairs of the Greater Teutonic Realm.
The Germans want to de-globalise the European finance. Imposing a tax on financial transactions (to “raise funds”) is another element of the same puzzle.
Austerity is just a tool – like one used to drive ethnic Russians away from Latvia (see my comments on http://www.nakedcapitalism.com/2012/06/michael-hudsonjeffrey-sommers-latvia-the-austerians-potemkin-village.html )
I doubt it, only b/c Europe’s banks are even more powerful than those in the US and UK (they’re more critical as capital markets tend to be less developed there), but still just as global. And it seems a bit far fetched too. 🙂
If you’re familiar with Italian politics, getting “in paradigm” would likely just mean more money stolen by politicians. Large quantity of intrinsic corruption. Much greater than in the US.
And, the average person there has much more “confidence” in the Euro than they do their old Lire. It’s sad actually.
The Euro doesn’t prevent government corruption. It just makes it more expensive.
@vincent, Converting currency is a nuisance, just like having to deal with centimeters and inches. The only people who benefit from peculiar measures are monopolistic manufactures.
Could this be a sort of “dead cat bounce” of the index? Today the President of Confederation of Italian industry says “GDP collapses, we’re in the abyss, damages like in a war”. It seems to me that “muddling out” is really the best possible scenario, the others are worst. It’s possible that in 2013 Gov will not refunde some “Shock absorbers”, so several farms will dismiss their workers and die (today they’re like “dead farms walking”) and there will be another big lack of aggregate demand. I’m very, very pessimistic.
yes, it’s just a hint of the possibility of stabilization.
I’m changing my Euros in canadian dollars or Jen. I’think the euro will most probably implode.
Is he talking about Mosler bonds?
“Euro zone countries under market pressure could issue covered bonds, which are backed by government assets or concrete tax revenue streams, to help calm markets, Finland’s Prime Minister Jyrki Katainen said in a statement on Thursday.”
almost but not quite. it’s still a matter of govt making payments, rather than the bondholder making his tax payments
If all business is a confidence game, how do we decide whether the faith (fide) is well founded or misplaced? How do we verify?
It seems the austerians have an advantage in the trust department. Nobody wants them to keep their promises, so they get credit for reneging, as Angela Merkel just did. “Sparing the rod” does not count as a bribe.
Italians crazy people.. confidence is football related 🙂
victories of Italian Football Team in European Champion is drug..
final match this evening against Spain..
two indebted nation are in the final.. and the major spain teams quite in default (and also a bank that financed football too much)..
and the strong Germany defeated some days ago..
LATIN CRAZY PEOPLE