Tag Archives: Eurostat

Default Now Or Default Later; Greece Still Withholding Critical Data

CDR’s Tim Backshall was on CNBC‘s “Strategy Session” this morning, discussing the key trends in sovereign products over the past few months, pointing out the declining liquidity in both sovereign cash and derivative exposure.

“Do they default now or default later.”

Tim Backshall


The most interesting observation by Backshall is the declining halflife of risk-on episodes, which much like the SNB‘s (now declining) interventions, are having less of an impact on the market, as ever worsening fundamentals can only be swept under the carpet for so long before they really start stinking up the place.

Tim Backshall

As Backshall points out in the interview, even the IMF now realizes that soon the eventual second domino will fall, and it is better the be prepared, than to have to scramble in the last minute as was necessary in May.

In other words, the storm clouds are gathering and only fools will invest in risk asset without getting some additional clarity on what is happening in Europe.

The bottom line as Backshall asks is: “do they default now or default later.”

Vodpod videos no longer available.

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This is happening as Bloomberg report that “four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt” and that EuroStat still has not received the required disclosure about just how fake (or real) the Greek debt situation truly is.

One might certainly wonder just how bad – and unknown – the situation in Europe is…

EUR/USD (last 48 hours):

EUR/USD. (Red: On-balance Volume. Yellow: Relative Strength Index).

Related by the Econotwist:

Is Mr. Barroso Really Competent To Be President Of The EU?

Barroso: EU Has Survived The Economic Crisis

Dangerous Economic Misconceptions

Basel III And The Fawlty Towers

European Banks Hunting For EUR 1,65 Trillion

Morgan Stanley: Governments WILL Default

Brussels Tells Athens To Shut Up And Take The Pain

Flight to Mystery

Greece About To Enter The Death Spiral

Germany’s Manic Depression

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European Inflation: Now You See It – Now You Don't

The European bureau of statistics released Monday the latest inflation numbers for the euro zone and the European Union. The overall figures shows an annual inflation rate at 1,7% in July for the euro zone, up from 1,4% a year earlier, to the highest level in 20 months.  However, on monthly basis the euro zone inflation was negative by -0,2% in July. Annual inflation rose in nineteen EU Member States in July, remained stable in one and fell in six.

“In July 2010, the lowest annual rates were observed in Ireland  with -1.2%  and the highest in Romania with 7.1%.”

Eurostat


The euro area annual inflation was 1.7% last month, up from 1.4% in June. A year earlier the rate was -0.6%. However, the monthly inflation was -0.3% in July, the European Bureau of Statistics, Eurostat, reported on Monday. Amongst the all EU member states, the annual inflation was 2.1% in July, up from 1.9% in June. A year earlier the annual rate was 0.2%. In July, the EU’s monthly inflation was -0.2%.

And the difference in inflation amongst the EU members are bigger than ever.

A fact that makes the European Central Bank‘s job even more difficult.

Some media reports Monday that the European inflation are picking up.

Personally I can’t see any clear trend, yet.

From Minus 1,2 To Plus 7,1

In July 2010, the lowest annual rates were observed in Ireland (-1.2%), Latvia (-0.7%) and Slovakia (1.0%).

The highest annual inflation is found in Romania (7.1%), Greece (5.5%) and Hungary (3.6%).

Compared with June 2010, annual inflation rose in nineteen Member States, remained stable in one and fell in six, Eurostat reports.

The lowest 12-month averages4 up to July 2010 were registered in Ireland (-2.4%), Latvia (-1.8%) and Portugal (0.0%), and the highest in Hungary (5.1%), Romania (4.8%) and Poland (3.3%).

Some Compartments

Interesting to compare the figures above with a few forecasts.

Here’s Saxo Bank’s CPI forecast for the euro zone and UK:

This is the Central Bank of Norway’s latest national CPI forecast:

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And here’s another interesting chart, comparing the inflation with the money supply:

(Source: TheBigPicture)

Time For New Wardrobes

Prices on clothes have dropped nearly 10% over the last weeks, while prices on transport, alcohol and tobacco and housing have rose substantially.

The main components with the highest annual rates in July 2010 were transport (4.5%), alcohol & tobacco (3.3%) and housing (2.7%), while the lowest annual rates were observed for communications (-0.8%), recreation & culture (-0.3%) and household equipment (0.5%).

Concerning the detailed sub-indices, fuels for transport (+0.48 percentage points), heating oil (+0.17) and tobacco (+0.07) had the largest upward impacts on the headline rate, while telecommunications (-0.09) and cars (-0.07) had the biggest downward impacts.

The main components with the highest monthly rates were recreation & culture (1.2%), hotels & restaurants (1.1%) and transport (0.5%), while the lowest were clothing (-9.7%) and household equipment (-0.6%).

In particular, package holidays (+0.15 percentage points) and accommodation services (+0.11) had the largest upward impacts, while garments (-0.51) and footwear (-0.12) had the biggest downward impacts.

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Here’s a copy of the latest Eurostat Inflation Report.

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EU Deficit Increased By14 Billion Euro In First Quarter Of 2010

The total budget deficit of the 27 EU member states swelled to -23,4 billion euro in Q1 2010, from -9,2 billion in Q4 2009, the first estimate from Eurostat show. At the same time, the trade surplus fell to EUR 13,2 billion, down from 19,1 billion in the previous quarter. The 750 billion bailout affect will probably surface in the Q2 numbers.

“These provisional data, issued by Eurostat, the statistical office of the European Union, will be subject to revision.”

Eurostat


The EU27 external current account recorded a deficit of 23.4 billion euro in the first quarter of 2010, compared with a deficit of 50.6 billion in the first quarter of 2009 and a deficit of 9.2 billion in the fourth quarter of 2009. Looks suspiciously like a double-dip, to me…

And I’m really curious about how the 750 billion bailout package will effect the Q2 numbers.

Eurostat also reports that the EU27 external balance of trade in services recorded a surplus of 13.2 billion euro in Q1, compared with a surplus of 19.1 billion in the fourth quarter of 2009, and a surplus of 13.3 billion in Q1 2009.

In the next quarter we’ll also see the effect of the recent decline in euro’s exchange rate.

It can be pretty ugly.

Eurostat points out that these provisional data, issued by Eurostat, the statistical office of the European Union, will be subject to revision.

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The EU27 includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.

Rotten To The Core?

EU’s “hard core” countries – called EA16 – consisting of Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland is responsible for 19,6  of the total 23,4 billion euro deficit, the estimates show.

That’s an increase of 26,6 billion euro, compared to Q4 2009.

In these countries the trade surplus have been cut in half during the first three months of 2010.

click to enlarge

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The “current account” shows flows of goods, services, income and current transfers between resident and non-resident entities. More specifically, the four main components of the current account are defined as follows:

1. The “goods account” covers general merchandise, goods for processing, repairs on goods, goods procured in ports by carriers and non-monetary gold. Exports and imports of goods are recorded on a f.o.b./f.o.b. basis, i.e. at market value at the customs frontiers of exporting economies, including charges for insurance and transport services up to the frontier of the exporting country.

2. The “services account” consists of the following items: transportation services performed by EU residents for non-EU residents, or vice versa, involving the carriage of passengers, the movement of goods, rentals of carriers with crew and related supporting and auxiliary services, travel, which includes primarily the goods and services EU travellers acquire from non-EU residents, or vice versa, and other services, which comprise those service transactions such as communication services, insurance, financial services etc.

3. The “income account” covers two types of transactions: compensation of employees paid to non-resident workers or received from non-resident employers, and investment income accrued on external financial assets and liabilities.

4. The “current transfers account” includes general government current transfers, e.g. transfers related to international co-operation between governments, payments of current taxes on income and wealth, etc., and other current transfers, e.g. workers’ remittances, insurance premiums – less service charges – and claims on non-life insurance companies.

ECB Accounting Responsibility

In line with the agreed allocation of responsibility, the European Central Bank (ECB) is in charge of compiling and disseminating monthly and quarterly balance of payments statistics for the euro area, whereas the European Commission (Eurostat) focuses on quarterly and annual aggregates of the EU.

“The data comply with international standards, in particular those set out in the IMF Manual on Balance of Payments Statistics (5th edition). The aggregates for the euro area and the EU are compiled consistently on the basis of Member States‘ transactions with residents of countries outside the euro area and the European Union respectively,” Eurostat writes in a statement.

Adding: “Monthly data may not add up to quarterly data due to rounding.”

The monthly data looks like this:

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“The EU balance of payments euro-indicators (first estimates for the reference quarter) are based on figures (current account and trade in services balances) provided by the Member States to Eurostat two months after the reference quarter, and should be considered as provisional. This News Release corresponds to these first estimates. Eurostat then produces a second release once the quarterly data are transmitted to Eurostat, on a more detailed basis, three months after the reference quarter. Figures may also be subject to revision when data for later quarters are transmitted by the Member States,” Eurostat states.

The second release for the first quarter of 2010 will be issued on 22 July 2010.

Press release from Eurostat.

Related by the Econotwist:

Fitch Gives EU Bailout Tripel-A Rating

Warns Against Euro Zone “Elite”

Europe’s Bailout: From Bad To Worse

Warning: Investing In Europe Can Make You Crazy

Euro Drops Below $1,20 As E.U. Plans For New Stability Pact

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