We’ve now got very clear evidence that the bailouts plus austerity solutions haven’t worked in Greece. Since the summer of 2012 Greek government debt has climbed to 183% of GDP from 159%. The economic austerity program imposed on Greece as the price for the bailout has caused the economy to contract. Rather than growing its way out of the debt crisis, the Greek economy has shrunk its way deeper into the hole.
The vote in the House of Commons on the government’s bill to take the United Kingdom out of the European Union wasn’t even close at 494 to 122. And the result puts Prime Minister Theresa May on schedule to meet her self-imposed deadline to trigger Article 50 by the end of March
So far the euro is hanging tough and the French financial markets are doing better than I expected. But I think that’s likely to change in the next four to six weeks after the March 15 elections in the Netherlands
Data released yesterday on growth in the EuroZone and Japan–coming after disappointing U.S. growth reported last week–certainly raise the question of whether the United States is quite as far ahead of the rest of the world’s developed economies as current market thinking believes
Confronted with German criticism of the asset buying stimulus program at the European Central Bank and German fears of resurgent inflation, bank president Mario Draghi advised patience today. “As the recovery will firm up, rates will go up as well,” Draghi told reporters after today’s meeting of the central bank’s board of governors.
Data released yesterday by Eurostat show inflation in the EuroZone as a whole growing at just 1.1% year-over-year. That’s actually good news since it’s the first year-over-year inflation rate over 1% since September 2013. You can look at this number and say that the European Central Bank’s program of quantitative easing is working. Finally. But inflation isn’t 1.1% in Germany. It’s 1.7% in the latest reading.
Yesterday the dollar rose another 1.2% against the euro to $1.0415, the highest since January 2003. And the US. currency climbed by another 1.4% against the yen. The Dollar Index added to its gain to hit a 15-year high.
Today the dollar has backed off a bit. Not surprising after the huge two-day run after Wednesday’s Federal Reserve meeting. But this does all raise the question of how much more there is left in the run.
Right now the U.S. dollar is the Energizer Bunny of currencies. The greenback climbed to 115.28 yen this morning. That’s the highest level since February 9. It also moved up against the euro, rising 0.7% to $1.0541.
