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German Boom Creates Ecb Policy Nightmare As South Lags

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http://www.telegraph.co.uk/finance/economics/8086434/German-boom-creates-ECB-policy-nightmare-as-south-lags.html

A separate report by Simon Ward from Henderson Global Investors said eurozone indicators are showing "unprecedented divergence", with the M1 money supply booming at double-digit rates in Germany but contracting in Spain, Ireland, and Greece.

S&P said Germany has been able to lever recovery off the emerging market boom, leaving Southern Europe behind. German exports – mostly machines and cars – account for 47pc of all EU goods shipped to China. France is a distant second at 10pc.

"Germany is recovering brilliantly," said S&P's Jean-Michel Six. "Its products are not price-sensitive to the exchange rate. It is entering a virtuous circle where exports lead to capital spending, leading in turn to consumption after years of quasi death."

S&P said the ECB is likely to heed German demands for tightening to nip inflation in the bud, creating a serious test for eurozone states still trapped in recession. "There could be a sharp jump in the euro exchange rate the next 12 months," it said.

While France has held up better than its Latin neighbours, it is losing global export share and is facing autumn strife as reforms spawn mass protest. The stoppages are costing up to €400m a day.

The risk for Europe is that the benefits of German recovery come more slowly than the pain of German-led rate rises. Mr Six said there are echoes of the 1992 Exchange Rate Crisis when Frankfurt tightened to cool over-heating at home, causing such severe strains for others that the system ruptured – though he believes monetary union is strong enough to weather any storm.

Bundesbank chief Axel Weber is already restless. He criticised the ECB move in May to buy Irish and Club Med debt and has called for a rapid exit from emergency measures.

The PIIGS are certainly helping to keep Germany competitive. Looks like a 2 tier Eurozone is forming. Question is can it be held together or will it implode.

The imbalances are growing PIIGS pain for German gain.

Still I'm sure the ECB know what they are doing....

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http://www.telegraph.co.uk/finance/economics/8086434/German-boom-creates-ECB-policy-nightmare-as-south-lags.html

The PIIGS are certainly helping to keep Germany competitive. Looks like a 2 tier Eurozone is forming. Question is can it be held together or will it implode.

The imbalances are growing PIIGS pain for German gain.

Still I'm sure the ECB know what they are doing....

It will implode for sure. What is the alternative. Will PIIGS really be happy to sit back and suffer indefinitely whilst Germany prospers. The same Germany responsible for World War 1 and 2 and mass genocide and evil doings!

The ECB should increase taxes in Germany to help fund mass bailouts of the PIIGS nations. Oh wait, they already did that. Must have been the right thing to do but they just didn't do enough of it.

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The south is already on the precipice. Recent PMI data already implying Spain &Portugal etc are in recession again. Greece is contracting 5% odd this year and Ireland went backwards last quarter as well.

They all have massive debts and need rapid growth to have a hope in hell of paying them off. A debt / deflation spiral is a certainty with the current economic policy forced by Germany. Reducing wages and spending. They need to rebalance externally and export, this is impossible with Germany keeping the € very strong. Spain especially looks in real trouble. A housing bubble to match ours, 1 million unsold properties built 20.5% unemployment. Main industries tourism and construction.

40% of Germany’s exports are going within the zone, they are benefiting massively from the euro. If the DM still existed it would be sky high, German exports would be 30-50% more expensive to southern Europe. There exports would be 30-50% Cheaper.

Eventually southern Europe will get to the brink of collapse; Germany will have to make a choice. Permanent bailout of these economies through unlimited lending / guarantees or withdraw from the eurozone. Not going to be pretty either way.

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  • 259 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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