Eurozone worsening debt crisis effects spreading South and East

July 25, 2012 – ECONOMY – Russia’s economy is set to succumb to the baleful effects of the euro zone’s fiscal and banking crises as commodity prices fall, the European Bank for Reconstruction and Development said Wednesday. As long ago as October of last year, the EBRD slashed its growth forecasts for eight economies in central Europe and the Baltics, or CEB, and seven economies in southeastern Europe, or SEE, citing their close trade and financial links to the euro zone. With strong growth elsewhere in the global economy supporting prices for oil and other raw materials, the EBRD’s forecasts for Russia were largely unchanged. But in its latest report on the outlook for the economies in which it invests, the development bank said the impact of the currency area’s prolonged crisis will spread further east, and drag Russia down. “The negative spillovers are reaching east, and to Russia in particular through two main channels: lower commodity prices and a general reduction in risk appetite,” said Piroska Nagy, director for country strategy and policy at the EBRD. As recently as May, the EBRD forecast that Russia’s economy would grow by 4.2% this year and 4.3% next, roughly in line with the 4.3% expansion it enjoyed in 2011. In the development bank’s latest report, those forecasts were slashed to 3.1% and 3.3% respectively. Those forecasts jar with the Russian government’s view. On Friday, Economic Development Minister Andrei Belousov said the government expects the economy to grow by between 3.8% and 4% this year, having earlier forecast it would grow by 3.4%. The EBRD’s warning on the growth outlook follows a report by Moody’s Investors Service Monday that said that if the euro zone’s crisis intensifies, the Russian economy could contract by 5% over the next 10 to 12 months, and the ruble could depreciate by 30%. With its own economic fortunes on the line, the Russian government Monday reaffirmed its commitment to support the currency area. “We hold 40% of our gold and forex reserves in euros, and structurally we’re not lowering that level of our reserves, and some of these reserves have been invested in the government securities of European states,” President Vladimir Putin said. “We’re not changing anything, we believe in the fundamental possibilities of the European economy.” The EBRD’s projections are based on the assumption that the euro zone “muddles through” its crisis, neither resolving it in the near term, nor letting a major economy such as Italy or Spain lose access to the international bond markets, leading to failures in a number of large banks. The development bank warned that should the crisis intensify, its forecast for growth in Russia and elsewhere would be even lower. -WSJ

Britain sinks far deeper into recession than expected
Read full article: http://www.reuters.com/article/2012/07/25/us-uk-gdp-idUSBRE86O0CM20120725
July 25, 2012 – LONDON - Britain’s economy shrank far more than expected in the second quarter of 2012, battered by everything from an extra day’s holiday to budget austerity and the neighboring euro zone crisis. Finance minister George Osborne said the country had “deep-rooted economic problems.” The Office for National Statistics said Britain’s gross domestic product fell 0.7 percent in the second quarter, the sharpest fall since early 2009 and a bigger drop than any of the economists surveyed in a Reuters poll last week had expected. The figures confirmed that Britain is mired in its second recession since the financial crisis, with the economy shrinking for a third consecutive quarter. It will add pressure on Osborne to get the economy growing again after a crisis that has left many Britons poorer as rising prices and higher taxes ate up meager wage increases. Sterling hit its lowest in nearly two weeks against the dollar after the data, and government bond prices rallied on speculation that the Bank of England may have to provide more economic stimulus than expected. Earlier this month the BoE has announced another 50 billion pound program of gilt purchases with newly created money to soften a grim economic outlook, but Wednesday’s data is likely to add to market speculation that it may cut interest rates later this year. “This is terrible data. Frankly there’s nothing good that comes out of these numbers at all,” said Peter Dixon, an economist at Commerzbank. “The economy looks to be badly holed below the water line at this stage. It’s a far worse period of activity than we’d expected.”

Spain moving from recession to depression as economic woes mount
Read full article: http://theeconomiccollapseblog.com/archives/12-signs-that-spain-is-shifting-gears-from-recession-to-depression
July 25, 2012 – MADRID - Bond yields soar above the 7 percent danger level. The stock market crashes to new lows. Check. Industrial activity plummets like a rock and the economy contracts. Check. The unemployment rate skyrockets to more than 20 percent. The bursting of a massive real estate bubble pushes the banking system to the brink of implosion. Check. Broke local governments beg the broke national government for bailouts. The international community pressures the national government to implement deep austerity measures which will slow down the economy even more and hordes of violent protesters take to the streets. Check. All of this happened in Greece, it is happening right now in Spain, and mark my words it will eventually happen in the United States. Every debt bubble eventually bursts, and right now Spain is experiencing a level of economic pain that very, very few people saw coming. The recession in Spain is rapidly becoming a full-blown economic depression, and at this point there is no hope and no light at the end of the tunnel. The bad news for the global economy is that Spain is much larger than Greece. According to the United Nations, the Greek economy is the 32nd largest economy in the world. The Spanish economy, on the other hand, is the 4th largest economy in the eurozone and the 12th largest economy on the entire planet. It is nearly five times the size of the Greek economy. Financial markets all over the globe are very nervous right now because if the Spanish government ends up asking for a full-blown bailout it could spell the end for the eurozone. There simply is not enough money to do the same kind of thing for Spain that is being done for Greece. Of course European officials are going to do their best to keep the eurozone from collapsing, but what they have completely failed to do is to keep these countries from falling into depression. As I have written about previously, Greece has already been in an economic depression for some time. I warned that Spain, Italy, Portugal and a bunch of other European nations were going down the exact same path. Now we are watching a virtual replay of what happened in Greece take place in Spain. Unfortunately, the global financial system may not be able to handle a complete implosion of the Spanish economy.

Greece may run out of money and go bankrupt by Aug 20, a British government analysis of the ongoing eurozone crisis has warned.

we are f..... here in europe .
it was the biggest mistake with this euro but this stupid kohlwanted to be the european
bullshit with the deuschmark all was fine since we have this euro all is getting expesive
but the salary is less

EUROBLOWN: Inflationary, stationary and vacationary.

SNIP

"Desperate times call for desperate measures…after the holidays

The Eurozone has now reached that stage you get to in the last half-hour of most sci-fi disaster epics. That’s where the asteroid is still headed straight for Washington, and so it’s time for Bruce Willis to strap a 2000 megaton bomb to his scalp, and get up there to nut the damn thing onto another course.

and

"Anyway, here’s the bottom line: truth in the Eurozone is now more inaccessible than Mitt Romney’s tax returns. But in the light of that pesky defaultoid heading straight for the unelected Brussels Commission, The Plan is to create a bank that can plunder the ECB at will, get the euro down to par with the Yuan, and push Greece back towards the Drachma. All those who think this won’t be inflationary, say “Aye!” now. "

ENd SNIP
http://hat4uk.wordpress.com/2012/07/25/euroblown-inflationary-stationary-and-vacationary/