Euro-Zone Factory Output Plunges.
Output from factories in the euro zone fell sharply in July to the lowest level in more than three years, raising new questions about the bloc’s ability to keep a modest economic recovery alive.
Thursday’s figures from Eurostat, the European Union statistics agency, came as something of a surprise, given generally strong survey data from manufacturers over the past couple of months. German and French business-confidence indexes in particular have been on a relatively consistent upward path for nearly a year. A Wall Street Journal poll of 21 economists had predicted a slight rise in output.
If the world’s population does in fact start to decline in 15 years as many are starting to predict, world economic activity may never improve – anywhere. Think of a small town in which the young mostly leave and the population continuously declines. Boarded up stores and factories and homeowners walking away from unsaleable hoses. Will the same thing, in general not happen to a world in population decline?
Businesses look ahead at least 15 years when planing investments.
Will the birth rate ever increase? – ask the the young women, it is entirely their call. Do I blame then if not? – not at all.
Yet recent German polls state that the people’s confidence in better times is at a 5 year high. Should we believe these reports? Who benefits from them?
Is it so hard to believe that they are cooking the books? The Chicoms release pure fantasy every quarter, have done since 1947. Maybe the Eurodorks are reverting to type.
This shouldn’t be a surprise to anybody who understands the A+B theorem. By the ECB’s own calculations, the supply of loans to businesses was still shrinking in the euro area as a whole at last report.
http://www.ecb.europa.eu/press/pdf/md/md1307.pdf
Factory output won’t budge? Well, how are retailers supposed to come up with the money to buy the output of factories (never mind manage to sell it) if Europe’s banks are systematically starving their people of purchasing power?
Germany is only doing as well as it is because the producers of Euro-confetti live in Frankfurt (the only city on earth cursed with two central banks, God help them!) and want Germany well supplied with what little purchasing power there is and her banks kept open at any cost. What, you think they want to have to explain to their next door neighbours what the ECB thinks its playing at, fiddling Oma out of her life savings? Not like there’s enough space on the roof of the ECB to fit enough helicopters to fly all the Frankfurt central banksters safely to Switzerland.
Kinda sounds like the 6 year Obama recovery alert.
“Thursday’s figures from Eurostat, the European Union statistics agency, came as something of a surprise”
Strangely, it’s always a surprise that leftist economic policies produce weak economies.
“Europe’s banks are systematically starving their people of purchasing power”
That makes no sense, unless you believe that printing money creates purchasing power, rather than inflation. Subscribers to your theory are the same people who believed the housing bubbles in the US/UK/Spain and elsewhere would never burst.
Purchasing power is not created by banks. Banks facilitate the flow of money and capital investment.
I smell sweatshops.
Oh, for heaven’s sake.
Banks have the privilege of manufacturing practically all the purchasing power in any given economy, and manufacture it the way bakers manufacture bread. They shouldn’t—the right to issue money and regulate its value is by right the sovereigns—but that is simply how things are.
I’ll let Major Douglas do some of the explaining.
In any manufacturing undertaking the payments made may be divided into two groups:
Group A: Payments made to individuals as wages, salaries, and dividends;
Group B: Payments made to other organizations for raw materials, bank charges and other external costs.
The rate of distribution of purchasing power to individuals is represented by A, but since all payments go into prices, the rate of generation of prices cannot be less than A plus B. Since A will not purchase A plus B, a proportion of the product at least equivalent to B must be distributed by a form of purchasing power which is not comprised in the description grouped under A.
The B payments of most relevance here are the bank charges, including debt service. If the banks immediately make a loan in an equivalent amount to another firm or to households, all is well—the revenues of the non-financial economy will continue to equal costs.
If the banks instead systematically call in loans and do not make new ones—never mind why for the moment—the most immediate effect will be that the money supply will shrink. More to the point, it will be impossible for people to purchase the economy’s output at a price that covers manufacturer’s costs, never mind leave enough to make it worth the manufacturer’s while to keep his factory open (or at least not move it to China!). You may observe the practical result of such a phenomenon most clearly in present-day Greece.
If the ECB were serious about setting the European economy straight—and not just covering the rumps of German banker—all they would have to do, if the money supply shrank and there was a general lack of purchasing power in Greece (say), would be to print and distribute enough debt-free money to make up for the amount the banks were sucking out. A few more enlightened economists have proposed for cases like this—not terribly seriously, to be sure—a “helicopter drop” of cash, by which 100 euro notes would be scattered by helicopters over Athens for the people to pick up on the street.
Major Douglas proposed, a bit more seriously:
1. a national dividend, where the ECB (in this case) would send cheques to Greek households in the amount of the estimated shortfall of purchasing power;
2. a compensated price, essentially a negative sales tax such that Greek households could purchase with A what would normally cost A+B, the balance covered by the ECB;
3. some combination of the two.
Back in the real world, of course, the ECB will laugh at you if you show up in Frankfurt and ask at the front desk for free money you don’t need to pay back—unless you’re a major European bank!
Don’t know about you Dick but I’m still waiting for the funny money Bill Aberhart promised my grandfathers.
We are becoming Detroit writ large.
Just look at Japan as its population plunges with cities soon to be half full. What will economies do with half a population, while immigrants hostile to civilization take over.
As far as I can tell they want the Union to fail..
This meme that the European Union was supposed to be a counterbalance to American power is false..
They had to form the Union to protect their democracies from their progressiveness.. There are a few countries that have more Muslims than their traditional citizens.. The danger of sharp and severe legal and social changes (like Sharia Law) are a very real possibility..
Turning over power to the central government will put the weight of the entire Union behind you.. Stopping democracy in its tracks to buy a generation or two for your doomed culture..
This is why they love the self loathing green religion so much.. They hate themselves but are to proud and arrogant to ever admit such a grand mistake and it violent consequences..
Self-flagellation is the Unions answer to the question none dare speak..
When you understand that the Union is a direct result of weakness and stupidity you will see it for what it is.. A marriage of convenience.. Taking the immigration trick and upscaling to a cultural level still leave one in a loveless dysfunctional marriage..
I do hope things turn out different.. But I don’t think it will.. Cutting off your balls is not the same as gouging out your eye.. Maybe Europe needs to do both?
Euro factories working in July and August?
There is a joke in there.
If world population declines, we are not reproducing ourselves.
Species that do not reproduce themselves go EXTINCT.
Problem solved.