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Imf: Europe's Still In The Dumps

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http://voices.washingtonpost.com/political-economy/2010/07/imf_europes_still_in_the_dumps.html

The International Monetary Fund this morning released its latest review of the eurozone economy, a collection of 16 countries that, judging from the report's conclusions, are becoming the continent's new Brothers Grimm.

Growth is slow -- and at risk of getting slower because bank credit has dried up. The banks themselves are undercapitalized and far too dependent on government support. Core prices are falling, raising the risk of a dangerous deflationary spiral. The entire project of the monetary union needs a full overhaul so that countries can be forced by a central authority to keep their budgets in line -- so that near-broke countries such as Greece look a bit more like Germany, and that tightwad Germany spends a bit more freely to support neighbors like Greece.

The project is a complicated one: The architects of the common euro currency knew going into the venture that they were creating a union that was only half-formed. The 16 countries share a central bank and a common monetary policy. But they control their own fiscal affairs and set their own rules when it comes, for example, to labor markets -- a fact that has prevented the type of labor mobility and wage adjustment considered necessary for an "optimal currency union."

The IMF, however, is never shy on dishing out tough love. Typical of the report's language was this staff appraisal: "The currency crisis results from unsustainable policies in some countries, delayed repair of the financial system, insufficient progress in establishing the discipline and flexibility needed for a smooth functioning of the monetary union, and deficient governance of the euro area."

The agency was also skeptical -- as have been many analysts -- about the thoroughness of stress tests currently being performed on 91 banks across Europe to see whether they will be able to weather another financial shock. In a conference call with reporters, Luc Everaert, assistant director of the IMF's European Department, said the fund will be looking closely at the release of the test results Friday to see what they do and don't prove.

"For Friday, what is essential is that we see broad coverage, scenarios that are severe but plausible, and it is going to be very important the they are clear plans" for raising new capital for banks that are judged to be weak, Everaert said.

Still it's contained and there is nothing to worry about.

Looks like we might be heading towards a growthless recovery.

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That will be a buy buy buy for EU stocks then:

EUROPEAN INDICES

London Last Trade Change Related Information

^FTSE FTSE 100 Index 5,214.64 4:35pm 75.18 (+1.46%) Chart, Components, more...

^FTLC FTSE ACT350 Index 2,752.32 4:35pm 40.17 (+1.48%) Chart, Components, more...

^FTMC FTSE MID250 Index 9,846.30 4:35pm 154.98 (+1.60%) Chart, Components, more...

^FTAS FTSE-A AllShare Index 2,691.45 4:35pm 38.75 (+1.46%) Chart, Components, more...

Frankfurt Last Trade Change Related Information

^GDAXI DAX Index 5,990.38 4:45pm 22.89 (+0.38%) Chart, Components, more...

^GDAXHI HDAX Index 3,029.55 4:45pm 16.91 (+0.56%) Chart, Components, more...

^MDAXI MDAX Index 8,173.55 4:45pm 136.38 (+1.70%) Chart, Components, more...

^MCAPM Midcap Market Index 751.62 4:45pm 12.26 (+1.66%) Chart, Components, more...

^SDAXI SDAX Index 3,991.86 4:45pm 57.64 (+1.47%) Chart, Components, more...

^TECDAX TecDAX Index 770.81 4:45pm 12.17 (+1.60%) Chart, Components, more...

Paris Last Trade Change Related Information

^FCHI CAC 40 Index 3,493.92 5:11pm 25.90 (+0.75%) Chart, Components, more...

^SBF120 SBF 120 Index 2,597.50 5:08pm 21.73 (+0.84%) Chart, Components, more...

^SBF250 SBF 250 Index 2,540.69 5:07pm 21.05 (+0.84%) Chart, Components, more...

^SBF80 SBF 80 Index 4,845.75 5:08pm 67.62 (+1.42%) Chart, Components, more...

Milan Last Trade Change Related Information

ITLMS.MI FTSE Italia All Share 20,629.58 4:38pm 154.13 (+0.75%) Chart, Components, more...

ITMC.MI FTSE Italia Mid Cap 22,705.70 4:38pm 132.02 (+0.58%) Chart, Components, more...

I952.MI FTSE Italia STAR 10,566.73 4:38pm 85.65 (+0.82%) Chart, Components, more...

FTSEMIB.MI FTSE MIB 20,137.92 4:30pm 152.60 (+0.76%) Chart, Components, more...

Madrid Last Trade Change Related Information

^IBEX IBEX 35 Index 10,040.80 4:35pm -20.50 (-0.20%) Chart, Components, more...

^SMSI Madrid General Index 1,107.53 27 Apr -24.59 (-2.17%) Chart, Components, more...

Scandinavia Last Trade Change Related Information

OMXC20.CO OMX Copenhagen 20 Index 405.03 4:00pm 3.81 (+0.95%) Chart, Components, more...

^OMX OMX Stockholm 30 Index 1,040.84 4:30pm 13.48 (+1.31%) Chart, Components, more...

^OMXSPI OMX Stockholm All Share Index 323.75 5:43pm 4.43 (+1.39%) Chart, Components, more...

^OSEAX Oslo Exchange All Share Index 400.80 5:15pm 6.52 (+1.65%) Chart, Components, more...

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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