Posted Sep 29, 2012 by Martin Armstrong
Tensions Continue in Greece
Tensions in Greece mounted over Greece’s impending need for more financial aid and its plan to make additional budget cuts in order to qualify for aid. Both internal and external pressures are squeezing the Greek government. Hundreds of thousands of Greek workers staged a strike Wednesday to protest the anticipated new budget cuts and Greek debtors are pushing the Greek government to force through the cuts. The Greek government is preparing to sign off on a 13.5 billion euro package of cuts and other fiscal reforms in exchange for continued bailout installments. In return Greece is expecting 31.5 billion euros in aid next month.
Spain’s Gov Yields Start to Move Back Up
Spain introduced its own round of spending cuts and tax increases while still delaying their request for a bailout in the hopes of getting more favorable conditions. They announced 13 billion euros in spending cuts and tax hikes for 2013. On Friday an audit showed that Spain needs 78 billion euros to recapitalize its banks and yields on ten year Spanish government debt started moving back toward the 6% level. All of this while rumors on the street started circulating that Spain’s credit rating could be cut below investment grade.
The Engine of the Eurozone Slowing
Germany has continued to show some signs of slowing down this week as the number of jobless claims rose for the sixth straight month in September and German business confidence fell for a fifth straight month.
China’s Central Bank Trying to keep up with the Fed and ECB
China’s central bank pumped 365 billion Yuan (58 billion Dollars) into its banking system, giving global investors new hope that the world’s second largest economy might turn around its trend of decelerating growth. The announcement was made after China’s major industrials announced a decrease in earnings which marked the fifth straight month of reported declining earnings.
Mixed Data Out of the US
The US Department of Commerce revised the second quarter annualized growth rate down to 1.3% from 1.7%. Us durable goods orders fell by 13.2% in August, their sharpest drop since January of 09. However, housing data was better as home prices and the volume of home sales increased.
Markets Take Back Bernanke’s Gift
Share markets suffered a second week of declines as investors continued to worry about the slowing global economy with the US markets erasing most of the gain from after the feds QE3 announcement. Gold and Silver on the other hand are still near their post QE3 announcement highs