Secular Café: Eurozone dragging markets down

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Eurozone dragging markets down Apr 24th 2012, 05:21 More misery http://www.guardian.co.uk/business/2...rkets-tumbling Quote: Fears of a long recession in the eurozone and increasing political instability in the Netherlands, France and the Czech Republic sent stock markets tumbling across the continent on Monday. Weak manufacturing output across Europe and the fall of the Dutch coalition government combined to spooktraders, who sold the euro and continental shares in favour of safer US dollars. The German Dax dropped more than 3.5% and the French Cac fell by 2.8%. In London £27.6bn was wiped from the value of the FTSE as it dropped nearly 2% to 5665. The euro's poor performance, which also reflected the uncertainty surrounding the outcome of the French presidential election, left the currency trading at 81.5p against the pound... ...All the main parties in France, including President Nicolas Sarkozy's UMP, have shifted the blame for the eurozone's woes to the lack of decisive action from the central bank... ...Official statistics from Eurostat showing a rise in sovereign debts also added to the grim picture. Ireland's debts rose by 13.1% last year. Italy ended 2011 with the second highest debt at 120.1% of GDP, after Greece at 165.3%. Spain's rose to 68.5% from 61.2%. Germany was the only country to cut its lending, with its debt shrinking to 81.2% from 83%. Across the 27-country EU, the average 2011 deficit was 4.5% of GDP, down from 6.5% in 2010. Among the EU states that do not use the euro, the UK had the highest deficit, which reached 8.4% of GDP in the year ended 31 March, equivalent to about 64% of GDP... ...The head of the influential German Ifo thinktank raised the pressure on Greece and other countries. "I personally believe there's no chance for Greece to become competitive (while) in the eurozone," Hans-Werner Sinn, president of Ifo, said in a luncheon speech in New York. "If Greece is kept in the eurozone, there will be ongoing mass unemployment." He also cited risks for other indebted eurozone countries. "Cutting wages and prices to the extent necessary in some southern European countries is impossible, whatever politicians say," Sinn said. I do wish they'd realise what a total mess the euro is and return to national currencies and national economic policies.

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