Italian Recession Accelerating

Italian Recession Accelerating

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Submitted by Tyler Durden on 02/08/2012 09:06 -0500

Yesterday we dedicated a quick post to the glaringly obvious - the complete decimation-cum-implosion of the Greek economy. Today we learn that the obvious apparently continues, following a Reuters report that according to an Italian source, Q4 GDP declined more than the 0.2% drop in Q3, and that there was no improvement in Q1 of 2012. In other words, Italy's economy is now contracting at an at least 0.3% annualized run rate. More as we get it, but it's not like any details will make the news any less bulllish, because this is obviously great news: the accelerating recession is far better than the "priced in" apocalyptic depression that the market was expecting. In other words, by simple inversion worse than expected is better than unexpected. Or something.

From Reuters:

Italy's economy shrank in the fourth quarter of last year, probably more steeply than the 0.2 percent decline in gross domestic product posted in the third quarter, a govermnent source told Reuters on Wednesday.

If the data is confirmed by national statistics office ISTAT when it issues Q4 preliminary GDP data on Feb. 15, it will mean Italy is officially in a recession which is widely expected to continue for most of this year.

"The fourth quarter was negative for Italy's economy, probably worse than the third," said the source, who asked not to be named.

Purchasing managers' indexes have indicated falling activity in both the manufacturing and service sectors in every month since last August.

The median forecasts in a Reuters survey of around 20 analysts conducted last month pointed to a 0.6 decline in GDP in both Q4 2011 and the first quarter of 2012.

The survey pointed to a full year GDP contraction of 1.2 percent this year, far worse than the government's official forecast of -0.4 percent. The Bank of Italy expects a decline of around 1.5 percent.

Activity at the start of this year has been further slowed by truckers strikes and unusually icy weather which have disrupted factory supplies.

Italian Recession Accelerating | ZeroHedge

European Bank Run Full Frontal

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Submitted by Tyler Durden on 02/08/2012 08:23 -0500

Update: due to popular request, the definition of EAP5 is as follows: "EAP5 are Italy, Spain, Portugal, Greece and Ireland", less politically correctly known as the PIIGS. See here.

This chart from Credit Suisse cuts through all the propaganda BS like a hot knife through butter.

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European Bank Run Full Frontal | ZeroHedge

Three Charts That Confirm Greece's Death Even After Restructuring

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Submitted by Tyler Durden on 02/07/2012 23:15 -0500

Perhaps after today's budget miss in the Hellenic Republic it is time that the focus shift from the reality of a pending #fail for the voluntary PSI (for all the reasons we have at length discussed no matter how many headlines the markets tries to rally on) to a post-restructuring real economy reality in Greece. Whether self-imposed by devaluation or Teutonia-imposed by Troika, austerity is in the cards but there is a much more deep-seated problem at the heart of Greece - a total and utter lack of innovation and entrepreneurship. As Goldman's Hugo Scott-Gall focuses on in his fortnightly report this week "the competitive advantage of innovation is one that developed markets need to keep" and in the case of European nations that desperately need to find a way to grow somehow, it is critical. Unfortunately, Greece, center of the universe for a post-restructuring phoenix-like recovery expectation, scores 0 for 3 on the innovation front. Lowest overall patent grant rate, lowest corporate birth rate, and highest cost of starting a new business hardly endear them to direct investment or an entrepreneurial dynamism that could 'slow' capital flight. Perhaps it is this reality, one of a Greek people perpetually circling the drain of dis-innovation and un-growth, that Merkel is starting to feel comfortable 'letting go of'. Maybe some navel-gazing after seeing these three doom-ridden charts will force a political class to open the economy a little more, cut the red tape (after a drastic restructuring of course) and shift focus from Ouzo, Olive Oil, and The Olympics. We also suggest the rest of the PIIGS not be too quick to comment 'we are not Greece' when they see where they rank for innovation.
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As if these were not bad enough, via Wikipedia, we also note the following three fun facts about the glorious Mediterranean nation:

Greece has the EU's second worst Corruption Perceptions Index after Bulgaria, ranking 80th in the world, and lowest Index of Economic Freedom and Global Competitiveness Index, ranking 88th and 90th respectively.

Quite impressive...and no wonder 5Y CDS held their high cost of protection even when immediate credit event triggers were doubted...sooner rather than later they will default again unless something drastic changes and our admittedly premature discussion of more violence is becoming more and more likely every day as social unrest seems the only catalyst for change in a surreal world of central bankers, banks, and politicians.


Three Charts That Confirm Greece's Death Even After Restructuring | ZeroHedge

Greek Economy Implodes: Budget Revenues Tumble 7% In January On Expectation Of 9% Rise

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Submitted by Tyler Durden on 02/07/2012 17:39 -0500

While hardly surprising to anyone who actually paid attention over the past two months to events in Greece (instead of just reacting to headlines) where among those on strike were the very tax collectors tasked with "fixing the problem", we now get a first glimpse of the sheer collapse in the Greek economy, which also confirms why Germany is now dying for Greece to pull its own Eurozone plug (predicated by a naive belief that Greece is firewalled as was discussed before. As a reminder Hank Paulson thought that Lehman, too, was firewalled on September 15, 2008). And what a collapse it is: according to just released data from Kathimerini, budget revenues lagged projections by €1 billion in the very first month of the year. "Revenues posted a 7 percent decline compared with January 2011, while the target that had been set in the budget provided for an 8.9 percent annual increase. Worse still, value-added tax receipts posted an 18.7 percent decrease last month from January 2011 as the economy continues to tread the path of recession: VAT receipts only amounted to 1.85 billion euros in January compared to 2.29 billion in the same month last year." This it the point where any referee would throw in the towel. But no: for Europe's bankers there apparently are still some leftover organs in the corpse worth harvesting. Unfortunately, at this point we fail to see how this setup ends with anything but civil war, as the April elections will merely once again reinstate the existing bloodsucking regime. We hope we are wrong.

Epic collapse:

The VAT revenue data represent a particular worrying sign regarding the depth of recession for 2012, while even more painful measures are expected to lead to a reduction in salaries and therefore a further drop in consumption. This is the vicious cycle that the government will have to tackle by way of additional fiscal measures this summer.

According to the current data, the 2012 budget will certainly have to be revised soon, given that the original estimate for a contraction of 2.8 percent is now raised to 3.5-4 percent of gross domestic product.

Finance Ministry officials attribute the slump in VAT receipt figures to the major cash flow problems that enterprises are facing. Some of the latter are choosing not to pay for their VAT in order to plug other holes caused by liquidity problems.

At the same time the crisis is seriously hurting the competitiveness of Greece’s economy, resulting in a considerable drop in entrepreneurship. Finance Ministry data showed that some 111,000 companies shut down in 2011, against just 75,000 new businesses being set up. In fact the majority of new start-ups are not actual enterprises but newly self-employed professionals.

This is attributed to the dramatic fall in market turnover and the insecurity that entrepreneurs feel, dissuading them from getting engaged in the local business field.

And this is the background against which the Troika wants Greece to cut another 150,000 people, and to cut minimum wage even more? Does nobody realize that at this point the entire Greek economy has frozen to a dead halt, and has joined only its utterly insolvent banking system in the dumpster?

How much longer will doctors fret around the patient before they finally have the decency to admit the patient has long since passed away?

Greek Economy Implodes: Budget Revenues Tumble 7% In January On Expectation Of 9% Rise | ZeroHedge