The Eurozone crisis has been quiet since the summer of 2012, as the markets waited for the German election. But now this has occurred, it is unlikely that the problem can continue to be ignored. It is easy to forget the drama of May 2012, when the blog correctly forecast a crisis was about to occur in […]
Chemicals and the Economy
Maersk’s $3.7bn new ships investment underwater as global ‘demographic dividend’ ends
The red line in the above chart from the Financial Times shows how far Eurozone growth has diverged since 2008 from the previous SuperCycle trend (in blue). Unfortunately, most companies failed to spot what might happen as a result of Europe’s ageing population. Instead they spent $bns on new capacity in anticipation of a strong economic […]
“Disaster is still some way off” for Cyprus, as Germany prepares to vote
Back in April, the blog suggested that capital controls might remain for rather longer in Cyprus than the “few days or weeks” suggested by the central bank. And a month later, the bank was still unrealistically claiming they would be lifted “as soon as possible”. Today, the blog’s own view that they could be in place “for […]
A flap of a butterfly’s wings to freeze the UK economy
The world’s media are increasingly aware that economic growth is being impacted by major demographic change. Thus the leading UK weekly magazine, the New Statesman, has published this article by the blog last week. It looks at the challenges facing the UK in the next few months. These are, of course, the same challenges that face all the major economies. “The [UK […]
Global interest rates surge as Newton’s 3rd Law continues to operate
Newton’s 3rd Law of Motion states, “To every action there is always an equal and opposite reaction“. Thus the forces of two bodies on each other are always equal and are directed in opposite directions. Policymakers forgot this Law in their response to the 2008 financial Crisis. Instead they believed that cutting short-term interest rates in the major economies to zero, […]
Don’t look down
Governments and central banks never spot recessions till it is too late. Thus after the 2008 Crisis, for example, it was recognised that only a few independent experts such as the blog had forewarned of the danger. Today’s situation seems potentially to be as serious as in 2008. Therefore as promised yesterday, the blog has decided to present its own analysis of the […]
Italy’s Grillo calls for referendum on leaving the euro
My words fly up, my thoughts remain below: Words without thoughts never to heaven go These lines from Shakespeare’s most famous play, Hamlet, aptly describe the critical issue in the Eurozone crisis. This issue is very simple, as the blog discussed last July. Monetary union and a common eurozone currency cannot exist without political and […]
Eurozone politicians have built a Tower of Babel
Last week saw the 20th EU ‘Crisis Summit’. Like the previous 19, it achieved little. Yet everyone at the meeting knew what had to be agreed: • A banking union which operates across national borders • The issuing of joint Eurozone bonds, guaranteed by all euro members • Adoption of a Federal budget and economic […]
Complacency rises as markets fall
Financial markets are telling us something important about the outlook. Profitable themes over the past month have been expectations of weakness in crude oil prices, in China’s economy, and in the financial sector; plus positive views on long-dated government bonds in the JUUGS (Japan, UK, US, Germany, Switzerland). 90% of market players probably dismiss most, […]
The Eurozone train crash heads for the buffers
For 25 years, Western policymakers coasted to electoral success on the back of an economic Supercycle. The BabyBoomers’ arrival in the Wealth Creator 25 – 54 age group meant there was just 16 months of recession between 1982-2007. Politics and policy thus hugged the middle ground. Political debate became based on focus groups, rather than […]
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