Remember European Problems? They’re Baaaack

Friday, September 2, 2011
By Paul Martin

Peter Tchir

Once again European debt problems are hitting the headlines and putting pressure on stocks globally. While we were busy basking in the glow of the now annual Jackson Hole rally, the situation in Europe actually got worse. The bickering and finger pointing seems constant now. A few key things are worth watching:

Bilateral collateral agreements: Finland’s side agreement is a big deal. Greece will not provide collateral to all the lenders, particularly the big lenders, but other countries cannot lend on terms less favorable than Finland.

Italian Austerity: The Italians seem to be retracting austerity measures at a record pace. Unlike Greece, which just failed to live up to the measures, the Italians have the confidence to actually vote them back down. Italy remains my dark horse in the race to leave the Euro.

Lagarde Speaks: Someone clearly forgot to tell Ms. Lagarde that the IMF is a joke of an entity and is supposed to do as it is told and not make more problems in Western Europe. Even if all she is doing is telling the truth.

Economic Data Weakens: Economic data out of Europe continues to be disappointing. Yesterday’s Manufacturing PMI was 49 which was the second month in a row below 50 and continued the downtrend. Without a booming economy in Germany, their willingness and ability to support the rest of Europe decreases rapidly.

The Rest…HERE

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