Friday, June 1, 2012

Chart of the Day

A chart to ponder as we wait for the monthly jobs report:

The above represents the latest available data for unemployment rates in the PIIGS countries (data through March, except only through Feb for Greece).  Spain and Greece in particular continue to spin wildly out of control.

As far as I can tell, there is still no coherent approach to managing the situation, which will therefore continue to get worse.  The latest twist is that Spain is signaling that it cannot afford to rescue Bankia (a hastily assembled consortium of regional banks that is now insolvent due to bad real estate loans made during Spain's property boom).
Europe is rapidly approaching the point where deflation is the concern, instead of inflation.  If the Germans are not ready to print money to replace that which is getting destroyed by default, they will soon find out that inflation isn't their biggest concern.  Sometimes you have to print money.

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