Mish's Global Economic Trend Analysis

"Wall Street is Little More than Glorified Crack House"; ECRI Sticks with US Recession Call; So Does John Hussman, with Odds Above 80%; So Do I; SF Fed has 50-50 Odds
US Petroleum and Gasoline Usage Plunges Last 5 Weeks Compared to Prior Years
Monetary Flight; European CEOs Move Cash to Germany; Spanish Companies Expect Return to Peseta; Expect Capital Controls
Cameron Finally Tells Sarkozy Where to Go; New treaty Splits European Union; Extreme Legal Complications Already; Expect Discord to Rapidly Spread
Moody's Downgrades French Banks Again Citing Significant Deterioration in Liquidity and Funding Conditions; EU Banks Must Raise $153 Billion of Extra Capital; Banks Running to Stand Still

"Wall Street is Little More than Glorified Crack House"; ECRI Sticks with US Recession Call; So Does John Hussman, with Odds Above 80%; So Do I; SF Fed has 50-50 Odds

Posted: 09 Dec 2011 11:05 AM PST

Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute (ECRI), talks about the U.S. economy and his recession call with Tom Keene on Bloomberg Television.

ECRI Sticks with US Recession Call

Link if video does not play: U.S. Economic Outlook, Labor Market

Partial Transcript

Keene: You had a recession call. What happened?
Achuthan: It's happening.

Keene: Too many economists are talking 3% GDP.
Achuthan: First off, I talked to you September 30th right here. I made the recession call, two months ago. A lot of economists since then, as they always do are focused on incoming data, a lot of which is coincident or short-leading, and indeed there absolutely has been stronger coincident and short-leading data. ... What we have learned from that is the recession did not begin in Q3. I do not know about Q4.

Keene: Amateurs look at the timing of the call. The pros look at the vector or direction of the call. You maintain the direction of the call.
Achuthan: We have not switched our call. If there is no recession in Q4 or first half of 2012 then we are wrong. You will not even know if we are wrong until a year from now. ..... So far we are talking about coincident data, production and jobs. Forward looking data since I saw you two months ago has remained weak, and is getting weaker. To my fellow forecasters out there, I'd say they are roughly in two camps. There are those who say the economy is firming and will continue to firm into next year. We reject that. There is nothing here to suggest that at all. There is a larger camp that says we are going to "muddle through" with slow growth. I would point out that has never happened. We never "muddle through".

ECRI Has This One Nailed

I think Achuthan and the ECRI have this forecast nailed. My problem with the ECRI is two-fold.

It does not disclose its "black-box" methodology
It trumps up its indicators as if they have never missed a call

Problem number one is easily explained. The ECRI sells a service and it does not want anyone figuring out precisely what it is doing.

Problem number two is serious. The ECRI claims its WLI has never missed a recession call. However, the facts show the ECRI has indeed blown recession calls and its own commentary proves it.

Please consider some excerpts from ECRI's Lakshman Achuthan Still Blowing Smoke

Note this statement by Achuthan to the Wall Street Journal.

Since ECRI itself has never used WLI growth going negative as as a recession signal, it is important that such "false alarms" are attributed not to ECRI or even to the WLI, but to what is a mistaken interpretation of the WLI.

In fact, at the very least, ECRI itself would need to see a "pronounced, pervasive and persistent" decline in the level of the WLI (not merely negative readings in its growth rate) following a "pronounced, pervasive and persistent" decline in ECRI's U.S. Long Leading Index (not discussed in the article), before it makes a recession call.

Next, please consider some charts and text from the ECRI publication The Great Recession and Recovery

ECRI Weekly Leading Index

"This is an index that's been around for over a quarter of a century, and over that time (shown here) it has correctly predicted every recession and recovery in real-time."

I need to repeat that, over this entire time period, I was present to see each of the correct recession and recoveries calls in real-time, without false signals in between.

Got That?

Look at that last panel carefully. The ECRI claims the WLI "has correctly predicted every recession in real time" while also stating "ECRI itself has never used WLI growth going negative as as a recession signal."

But wait. There's still more ECRI hypocrisy.

Flashback November 2007 ECRI Vol. XII, No. 11: Weakness In Leading Indicators Not Yet Recessionary

Please consider the following image snip. Highlighting is mine.

The ECRI persisted for months the recession was avoidable. In January 2008 the ECRI said there was a "window of opportunity". In March of 2008, months after the recession started, the ECRI finally threw in the towel and relented, calling it a "recession of choice".

Please see A Look at ECRI's Recession Predicting Track Record for numerous details.

The idea the US could have prevented a recession in January of 2008, as the ECRI claimed is stunningly preposterous, as is the ECRI lie that the WLI has a perfect track record.

ECRI Track Record is NOT perfect

As I said (and more importantly have proven), the ECRI's track record is not perfect. Nor is mine or anyone else's. All Achuthan needs to do is stop pretending the ECRI is perfect, and I will stop bringing this matter up.

That said, I will reiterate that it is highly likely the " ECRI has this forecast nailed". Moreover, John Hussman at Hussman Funds agrees.

Estimated Probability of Recession Over 80%

On December 4, in Have We Avoided A Recession? Hussman takes a crack at predicting the odds of recession.

In recent months, we've observed a fairly neutral flow of economic data - not strong by any means, but offering a reprieve from the clearly negative momentum that we observed in late-summer. ...

In our view, it is very difficult to obtain useful views about economic direction using the standard "flow of anecdotes" approach that is the bread-and-butter of many analysts. The economic data reported daily are a mix of leading, coincident and lagging indicators, often noisy and subject to revision, and without any overall economic structure. Adjusting one's entire economic views following each report, as if each somehow adds significant information, is a recipe for confusion. Treating economic data as a flow of anecdotes, without putting any structure around them, is why the economic consensus has failed to ever anticipate an oncoming recession.

We use a variety of methods to gauge recession risk. The most straightforward is to form fairly low-order indicator sets like our Recession Warning Composite (see November 12, 2007, Expecting A Recession ), that have a long historical record of accurately distinguishing recessions.

As of last week, a simple average of 20 of these binary recession indicators continued to show a preponderance of signals still in place - a condition that has never been observed except alongside a U.S. recession.

Moreover, we can select random subsets of these indicators across random periods of time, in order to make the model less sensitive to exactly how it is put together. That method typically produces more variation in the overall conclusion about the economy, so the confidence in that conclusion is particularly strong when multiple models agree.

At present, we observe agreement across a broad ensemble of models, even restricting data to indicators available since 1950 (broader data since 1970 imply virtual certainty of recession). The uniformity of recessionary evidence we observe today has never been seen except during or just prior to other historical recessions.

"Wall Street is Little More than Glorified Crack House"

My favorite part of the article is not the recession prediction odds but Hussman's accurate rant at the end.

We represent the Lollipop Guild

Frankly, I am concerned that Wall Street is becoming little more than a glorified crack house. Day after day, the sole focus of Wall Street is on more sugar, stronger sugar, Big Bazookas of sugar, unlimited sugar, and anything that will get somebody to deliver the sugar faster. This is like offering a lollipop to quiet down a 2-year old throwing a tantrum, and expecting that the result will be fewer tantrums.

What we have increasingly observed over the past decade is nothing but the gradual destruction of the ability of the financial markets to allocate capital for the benefit of future growth. By preventing the natural discipline of the markets to impose losses on poor stewards of capital, and to impose interest rates high enough to force debtors to allocate the capital usefully, the world's policy makers are increasingly wrecking the prospects for long-term economic growth. The world's standard of living (what we can consume for the work we do) is intimately tied to its productivity (what we can produce for the work we do). That productivity requires our scarce savings to be allocated to productive physical capital, and to productive human capital (primarily education).

Nietzsche famously said "What does not kill me makes me stronger." The corollary is "What constantly rescues me makes me weaker." The world will only stop looking for bailouts when policy makers stop handing them out.

San Francisco Fed Calculates 50% Chance of Recession

In yet one more look at recession chances, please consider Future Recession Risks: An Update by the San Francisco Fed.

Gathering storms across the Atlantic threaten a U.S. economy not yet recovered from the last recession. The September Economic Outlook from the Organisation for Economic Co-operation and Development (OECD) indicates that growth prospects have significantly dimmed for major industrialized economies (OECD 2011). Growth in the G-7 countries is expected to remain below 1% for the rest of the year, while the odds of a contraction are fifty-fifty.

The American business cycle in international context

Fluctuations in U.S. economic activity sometimes have an international component. The oil crises after OPEC's oil embargo in 1973 and the Iranian revolution in 1979 engulfed a large portion of the global economy. Although financial crises in advanced economies are rare, they can leap continents and borders with tremendous facility, as we learned in 2008. It is tempting to think that such contagion is a modern phenomenon. However, using a data set spanning 140 years, Jordà, Schularick, and Taylor (2011) have identified five such financial crises. In each case, 9 to 10 countries out of a sample of 14 advanced economies were dragged into the financial maelstrom. Will the European sovereign debt crisis evolve into one of these events? If so, what would be the risks to the U.S. economy?

Calculating recession odds due to domestic and external factors

Figure 2 shows our updated recession probability forecasts. The thin red line shows the LEI-based predictions we calculated in 2010, which run until 2012. The black dashed line shows the LEI-based predictions using data through August 2011 and extends until mid-2013. The dotted green line shows the predictions based on international CLI data released through July 2011. The thick blue line displays the odds of recession based on combining the lines based on domestic and international factors.

In the next few months, the odds of recession due to domestic factors appear reasonably contained. Those odds increase gradually and reach about 30% in the second half of 2012, after which they decline. However, the curve reflecting the international odds suggests more imminent danger to the economy, although this threat is harder to calibrate using historical data and only indirectly reflects the health of the European financial system. Recession odds based on international factors peak at about 45% toward the end of 2011, but decline rapidly thereafter.

The combination of these two recession coins, shown in the combined risks line of Figure 2, is quite disconcerting. It indicates that the odds are greater than 50% that we will experience a recession sometime early in 2012. Because the international odds of recession are more imprecisely estimated, one must be careful with a strict interpretation of this result. But the message is clear. Prudence suggests that the fragile state of the U.S. economy would not easily withstand turbulence coming across the Atlantic. A European sovereign debt default may well sink the United States back into recession. However, if we navigate the storm through the second half of 2012, it appears that danger will recede rapidly in 2013.

San Francisco Fed Understates Problems in US and Europe

I believe the San Francisco Fed significantly understates the problems in the US economy. Moreover, the SF Fed even more seriously understates the problems in Europe. Finally the SF Fed does not address the numerous problems in China at all.

Europe is in recession right here right now. That European recession probability approaches 100% in my opinion. Worse yet, various austerity measures imposed on numerous European countries ensures the recession will be long and deep. Numerous tax hikes in Italy, Europe's third largest economy compound the problem greatly. For a few details of Europe's problems please see ...

The China Factor

China's manufacturing PMI plunged to a 32-month low of 47.7 and is in contraction. China's real estate sector is in shambles. Chinese demand for commodities will drop, putting pressure on exporters like Australia and Canada. Global trade will suffer.

In short, the ECRI Sticks with its US Recession Call, So Does John Hussman, and so do I for numerous US and global reasons.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

US Petroleum and Gasoline Usage Plunges Last 5 Weeks Compared to Prior Years

Posted: 09 Dec 2011 09:04 AM PST

Here is a set of charts from reader Tim Wallace on Gasoline and Petroleum usage vs. the same five weeks in prior years. Explanations from Wallace follow each chart.

click on any chart for sharper image

Petroleum Usage

Petroleum usage history for the past 6 years for this 5 week snapshot - you can see the drop from '06 to '07 was small but I caught that trend in Oct of '07 and got out of the market.

My experience suggests that if petroleum does not grow at least 0.8% year on year the economy is headed recessionary. Notice the plunge of '08 into the abyss of '09.

We see a good improvement in 2010, not anywhere near the recovery we need as we were in an abyss, but it shows improvement. This year, we see another significant downturn, reflective of a stalled at-bet economy.

Gasoline Usage

Gasoline usage history shows a small rise in '07, then a plunge in '08. Usage level for the next two years was flat, followed by a huge plunge now. I did not expect this plunge because gasoline is a lot less volatile in my historical analysis than the overall distillates, some of which are weather related, such as heating oil.

It raises the question, why have people stopping driving, because that is what is happening.

Fuel Distillates Usage

The third chart shows the fuel distillates usage. This is the diesel, heating oil segment combined. Diesel makes up 17% of all petroleum and heating oil 3%. Much of the driver in the petroleum usage drop in '08 and '09 came from this segment of the economy. The current drop is due to a huge plunge in gasoline usage.

Percent Change from 2006 Baseline

The final chart shows the percentage changes in the past five years off the 2006 baseline. You can see gasoline at about 46% of distillates usage is the driver for the big drop in petroleum right now.

Cash-for-Clunkers Mileage Improvement Not the Explanation for Gasoline Plunge

Please see Crude Futures Have Risen Significantly, So Why are Gasoline Prices Relatively Low? for additional commentary and a rebuttal to the idea that improved mileage or cash-for-clunkers may have anything to do with the current decline in gasoline usage.

The best explanation for declining gasoline usage is that millions have dropped out of the labor force.

Quick Facts on Unemployment Rate

In the last year, the civilian population rose by 1,726,000. Yet the labor force fell by 67,000. Those not in the labor force rose by 1,793,000.
In November, those "Not in Labor Force" rose by a whopping 487,000. If you are not in the labor force, you are not counted as unemployed.
Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Please see Charts of the Day: Labor Force and Unemployment Rate Adjusted for Population Growth Since 1948 Show Falling Unemployment Rate is "Statistical Mirage" for details and charts.

People have given up looking for work, entered forced retirement collecting social security, ran out of unemployment benefits, do more shopping online, or are simply too broke (or have less desire) to travel than before.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Monetary Flight; European CEOs Move Cash to Germany; Spanish Companies Expect Return to Peseta; Expect Capital Controls

Posted: 09 Dec 2011 08:58 AM PST

Bloomberg reports European CEOs Move Cash to Germany

Grupo Gowex (GOW), a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank.

"I don't trust Spain will remain in the euro zone," said Jenaro Garcia, founder and chief executive officer of Madrid- based Grupo Gowex, which provides Wi-Fi access in 15 countries. "We moved our cash and deposits to Germany because Spain will come back to the peseta."

The Bundesbank, Germany's central bank, registered capital inflows of 11.3 billion euros ($15 billion) from non-banks in September, according to the breakdown of its current account published Nov. 9. That helped transform a deficit of 47.3 billion euros in Germany's balance of other capital flows in August to a surplus of 700 million euros in September.

"A couple of weeks ago I would never have thought about having conversations on the probability of the euro disappearing, but now there is more speculation on such a scenario," Wolters Kluwer NV (WKL) CEO Nancy McKinstry said in a Nov. 29 interview at the company's headquarters outside Amsterdam.

"We obviously have plans in place if something happens," ABB Ltd. (ABBN) CEO Joe Hogan said in Zurich on Dec. 1. "They can never be as robust as you'd want them to be but we certainly are prepared if there is a crisis."

The Swiss engineering company "updated what we would do" in the past few weeks, Hogan said. "We just keep updating and making our plan more and more detailed.'

"We are more careful about investment decisions," said Juerg Oleas, CEO of GEA, a machinery maker based in Dusseldorf. "We have internally defined maximum amounts that we place with a single bank."

K+S AG, Europe's biggest potash supplier, said the company is assessing the counter-party risk of the banks it works with and, should they reach predetermined thresholds, stop the flow of any new funds into that institution.

"We spread our risk by defining maximum amounts that we allocate to individual bank or issuers of commercial paper and spread our funds broadly among many different parties," said K+S spokesman Michael Wudonig.

Juan Jose Nieto, chairman of Service Point Solutions SA (SPS), a Barcelona-based document-management company, said he would move the company's headquarters to the U.K. or Scandinavia in the event of a euro breakup.

Expect Capital Controls

As I said in regards to Greece, the sane thing to do is get your money out of any troubled countries. If everyone does the sane thing, it will bring the crisis to a head quicker. In response, expect countries to impose capital controls.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Cameron Finally Tells Sarkozy Where to Go; New treaty Splits European Union; Extreme Legal Complications Already; Expect Discord to Rapidly Spread

Posted: 09 Dec 2011 02:00 AM PST

UK prime minister David Cameron was ready to sign on the Merkozy treaty dotted line if he got exceptions to some UK-unfriendly rules.

When Sarkozy refused to go along, the two got into a nice verbal feud, and Cameron finally said what he should have said months if not years ago as reported by Yahoo!Finance in New treaty Splits European Union

"What was on offer is not in Britain's interest so I didn't agree to it," he told reporters in Brussels.

"We're not in the euro and I'm glad we're not in the euro," he said. "We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up."

Now, what's so hard about that? Cameron's next move should be to tell the EU to take all of their rules and shove them too.

Hungary Opts Out, So will Sweden, Czech Republic Undecided

Swedish Prime Minister Fredrik Reinfeldt signaled after the meeting it was unlikely his country would join the accord.

"It would be very odd signing up to a treaty pointing out as if we were a eurozone country," he told The Associated Press. "And that was never the aim."

The governments signing onto the new treaty will have to agree to allow unprecedented intervention in national budgets by EU-wide bodies.

According to a statement issued after the meeting broke up, governments participating in the agreement will need to have balanced budgets — which is counted as a structural deficit no greater than 0.5 percent of gross domestic product — and will have to amend their constitutions to include such a requirement.

The treaty will include an unspecified "automatic correction mechanism" for countries that break the rules, the statement said.

In addition, countries that run deficits larger than 3 percent will face sanctions.

To prevent such deficits, countries will have to submit their national budgets to the European Commission, which will have the authority to request that they be revised. Countries will also have to report in advance how much they plan to borrow.

Extreme Legal Complications Already

Via Google Translate please consider this snip from Spiegel Online

The new agreement between the 23 EU countries, according to experts, however, could lead to numerous legal problems, because the rules must not contradict rules of the EU treaties.

Cameron calls into question whether the proposed new fiscal union is allowed to use EU-institutions. "The institutions of the European Union are the European Union, the 27," said British Prime Minister.

Expect Discord to Rapidly Spread

The simple solution to Cameron's legal problem is for the UK (and any other country with the same objection) to leave the EU. All it would take is a voter referendum.

Meanwhile, the discord between Cameron and Sarkozy is going to quickly spread elsewhere.

The more details this new treaty adds, the more discord there will be. The entire package will blow up in May (if not long before that) if any country or the German supreme court insists on a voter referendum.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Moody's Downgrades French Banks Again Citing Significant Deterioration in Liquidity and Funding Conditions; EU Banks Must Raise $153 Billion of Extra Capital; Banks Running to Stand Still

Posted: 09 Dec 2011 12:45 AM PST

Moody's downgraded Credit Agricole, BNP Paribas, and Societe Generale today. This is fresh on the heels of a September downgrade of Credit Agricole and Societe Generale in September.

Please consider French bank ratings downgraded again by Moody's

Credit rating agency Moody's has downgraded France's three big banks due to their difficulty borrowing money. The agency cut Credit Agricole and BNP Paribas from Aa2 to Aa3, and Societe Generale from Aa3 to A1.

The move follows a previous rating cut by Moody's for Credit Agricole and Societe Generale in September.

"Liquidity and funding conditions have deteriorated significantly" for each of the banks, Moody's said, adding that the problem was likely to worsen.

"The probability that the bank will face further funding pressures has risen in line with the worsening European debt crisis," the rating agency said of each of the three.

It also assigned a negative outlook to all three banks' ratings, warning that it will continue to monitor the European bank debt markets, and would downgrade them again if conditions look set to worsen.

Last week, the problem prompted the European Central Bank, the US Federal Reserve and four other major central banks to agree to help each other provide cheap emergency loans to their banks in each other's currencies.

The surprise move sparked speculation that one or more major European banks may have been on the point of collapse.

Both BNP Paribas and Societe Generale have announced large asset sales in recent months, in order to reduce their total exposures and their reliance on short-term wholesale funding.

BNP plans to sell 70bn euros of assets, or 10% of the bank's entire balance sheet, with a focus on its dollar-denominated loans.

Banks Running to Stand Still

Bloomberg reports EU Banks Must Raise $153 Billion of Extra Capital

European Union banks must raise 114.7 billion euros ($152.8 billion) in fresh capital as part of measures introduced to respond to the euro area's sovereign-debt crisis.

German banks need to raise an additional 13.1 billion euros, Italian banks 15.4 billion euros, and Spanish lenders 26.2 billion euros in core tier 1 capital, the European Banking Authority in London said yesterday.

"It looks as if the banks are running just to stand still," said Matthew Czepliewicz, a banking analyst at Collins Stewart in London. "The backdrop has worsened, therefore banks in the interim have decided to lower their sovereign holdings and some have raised equity, so they've reacted and yet the aggregate number hasn't changed much."

Other lenders needing to bolster their reserves include Deutsche Bank AG, with a shortfall of 3.2 billion euros, Banco Bilbao Vizcaya Argentaria SA (BBVA), which missed the target by 6.33 billion euros, BNP Paribas (BNP) SA, with a shortfall of 1.5 billion euros, and Societe Generale SA (GLE), which needs 2.1 billion euros. Commerzbank AG (CBK) needs 5.3 billion euros to meet the target, German regulator Bafin said. France's Groupe BPCE, the owner of Natixis SA, had a 3.7 billion euro shortfall, and Italy's Banca Monte dei Paschi di Siena SpA (BMPS) needs to raise 3.27 billion euros.

Dexia SA (DEXB), the French-Belgian lender that's being broken up, said it won't have to comply with capital rules set by the European Banking Authority because it's planning to "radically shrink in size."

Bank of France debts jump tenfold on capital flight

For more on the liquidity issues facing French banks, please consider Bank of France debts jump tenfold on capital flight by Ambrose Evans-Pritchard.

French lenders lost €100bn (£86bn) in short-term deposits in September alone, mostly due to precautionary moves by US money market funds and Asian investors afraid of France's exposure to Italy. "There were huge net capital outflows," said Eric Dor from the IESEG School of Management in Lille.

While the liabilities can in theory keep rising for ever within EMU, they signal grave imbalances, such as the North-South trade gap so long ignored until it proved fatal. They ultimately leave debtor central banks deep under water if the eurozone breaks up. "We are in unknown territory in terms of monetary theory," said Mr Dor.

On the creditor side, the Bundesbank is left holding €465bn in IOUs, and the Dutch central bank €89bn, stoking fears that these countries could suffer a big loss if EU leaders fail to contain the crisis. The national central banks are also on the hook for the ECB's other operations.

Simon Ward from Henderson Global Investors said ECB support has jumped by €465bn since April, with a sharp rise of €102bn over the last four weeks. The total exceeds €1.3 trillion, or 4.5pc of eurozone GDP.

Desperate Times Lead to Desperate Lies

Flashback September 25, 2011: Desperate Times Lead to Desperate Lies

Check out these preposterous lies by Bank of France Governor Christian Noyer as quoted by Bloomberg in Noyer Sees 'Absolutely No Reason' to Use Bank Backstop

Noyer Lies

"I'm extremely confident" in French banks because "we know them very well. We know their balance sheets, their risk assessments. We know they have no toxic assets."

There is "absolutely no reason" to activate a support system for the nation's banks that was set up during the financial crisis in 2008.

Markets "are over-reacting," he said. "They need to come back to a sense of reality."

All of those are blatantly preposterous. However, lie number 1 has to be one of the top lies of the year. "French banks have no toxic assets"?!

For starters, what about Greek bonds about to take a 50% haircut or more in default? That lie is so ridiculous no one on the planet can possibly believe it.

Dexia Bank Blows Up October 3

Two refresh your memory, less than two weeks after Bank of France Governor Christian Noyer made his preposterous statements, Dexia, a combined Belgian-French bank went under. Please see Dexia, Belgium's Largest Lender About to Become First Casualty of Greek Default; Emergency Meeting to Split Bank Now in Progress.

Difficult to Believe Anything

The lies are so blatant now, it is difficult to believe anything a bank says, an EU official says, the IMF says, or the EMU says.

I remind you of the admitted policy of Jean-Claude Juncker, the prime minister of Luxembourg and chairman of the eurozone finance ministers: "When it becomes serious, you have to lie".

Given that things are nearly always serious, the safe thing to do is not believe anything, especially in regards to solvency issues, capitalization needs, and liquidity problem denials.

I have a big hint for all these eurocratic and central bank liars: If you want to restore confidence, the first thing you have to do is tell the truth.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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Mish's Global Economic Trend Analysis

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