EUROZONE – KEY INDICATORS TO WATCH


riotDuring my lunch break today I walked the dogs on the beach and, as you do, I mused over the question, “What are some of the key indicators to watch in the Eurozone?”

I concluded that the first indicator of interest should be ‘Youth Unemployment’.  By December 2012 Eurozone youth unemployment was at a record 23.9%.  At that time, Spain and Italy had seen the biggest jumps to 55.9% and 36.5% respectively. Whilst Germany was at 8.1%, Greece remained the worst at over 56%.  No society (if, like the political elite, you choose to think of the Eurozone as a society) can survive for long carrying these levels of youth unemployment.

The other indicator of perhaps more immediate interest, now that Cyprus is shortly for the kibosh, is that of capital (euros) flowing in/out of Eurozone banks.  In January, the Financial Times reported that the first 8 months of 2012 “had seen €406 billion flow out of [Portugal, Ireland, Italy, Greece and Spain], equivalent to almost 20% of GDP in [those] economies.  In 2011, outflows from [those countries] totalled €300 billion.”  Since then some €100 billion of capital has flowed back, but it’ll be interesting to see the next analysis of capital movements in the Eurozone once the situation (crisis?) in Cyprus is ‘resolved’, or enters whatever phase comes after the existing deadlock.

I’ve held the view for yonks now that if/when the euro monetary union spirals out of control (it is, after all, merely a political construct, making no fundamental socio-economic sense in and of itself), then control would be lost by dint of a systemic, Eurozone-wide bank run.  My money remains on this being the case.  The alternative is that the Euro elites patch up and prop up the currency ‘indefinitely’, thereby consigning tens of millions of European citizens to penury ‘indefinitely’.

‘Indefinitely’ may be defined as, ‘until Europe’s youth revolts’.

15 comments

  1. Ceekay · ·

    Hi MM

    I’ve spent the past few months in Spain and I thought I’d share a few tidbits.

    An earlier poster stated that the unemployment number is low here, I suggest the opposite. Certainly in this part of Spain there are a lot of people claiming but also a lot of people working at the same time. Most of the Spanish youngsters I have talked to are claiming some sort of benefit while earning a decent sum, ‘off the books’. I even had to pay my dentist in cash last week!!

    They see nothing wrong in this because the papers are full of multi-million euro back handers, secret swiss accounts and corruption at the very highest level. Not a great example to be setting and certainly no basis for turning things around.

    The other thing I’ve noticed is how pro the Euro people still are, even pro the EU. In Catalonia for example, they’d rather secede from Spain but stay in the EU!!!! Unfortunately I suspect this hateful, vile, corrupt project has a lot of life in it yet.

    Thanks for your musings, it does us good to realise there are like minded souls out there.

    All the best

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    1. moraymint · ·

      Thanks Ceekay. I believe firmly that the reason so many European citizens are so in favour of the EU/euro has much to do with the truly stupendous (and extremely costly) propaganda war that the European Commission has been waging on the peoples of Europe for decades. It’s obscene really. The other factor, I presume, is related to the turbulent history of the European continent and the desire of those peoples to live in peace and prosperity. Regrettably and ironically the European Union is fomenting unrest (at best) and penury across Europe. You couldn’t make it up really. Stay in touch.

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  2. John B · ·

    I like Mike’s comments, and I also admire your common sense and use of moderate language, Moraymint.
    I am in a similar situation. A highly qualified professional, with an international reputation, lecturing and publishing around the world, but not a UK resident since 2008.
    It has been a good choice, and it will become an option for many others, considering how things are in the home country. Initially I had some regrets, based on old loyalties, but now I see no going back. I am sure there are many others like Mike and me.

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  3. Dear Mr Moraymint:

    I’ve followed your posts for a while, admiring your common sense and control. I share your views in general.

    But I would offer the opinion (I have friends in Spain and even know a Russian oligarch) that increasingly people are operating either personally or as businesses outside the normal confines of nation state. You might term this the “black economy”. But its a rational response from people who have given up on their Governments. In the global world, notions of “nationality” are increasingly meaningless. Amazon, Apple, Starbucks are just a few well known examples. The farmers in Spain selling their Ibericos at market for cash would be an example at the other end of the scale. And its not just in terms of financials, but also in terms of personal lifestyle and morality etc.

    I’m a case in point. I am a highly qualified mathematician, have published and lectured widely, have run several sucessful businesses and have changed citizenship to a more agreeable location – and may well change again.

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    1. moraymint · ·

      Thanks Mike, that’s an interesting and understandable take on the era in which we live. Certainly I can associate with the idea of having given up on one’s government; I can safely say that I have lost all faith, or whatever faith I ever had in the British political class and its institutions. I like the notion of living and working outside of the usual confines of ‘the state’, with the caveat of doing so with strong moral principles. Increasingly, however, I am finding myself questioning the the ‘laws of the land’, enacted as they often are without democratic mandate … stay in touch.

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  4. John B · ·

    I agree. Youth unemployment is at the heart of Europe’s problems. We should offer them opportunities, and we don’t.
    Here in Spain the figures are way understated, with a lot of ‘students’ in their 20s being kept off the totals. They have great potential, but are stuck in programs where on some days they have only one or zero lectures. Wasting their young lives.
    In most European countries, strong unions are keeping older people in cushy public employment, in what Lord King called ‘The comfort zone’. This is at the expense of the kids, who should form the future of a sound society. Heartbreaking.

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  5. David C · ·

    The UK figure of 992,000 out of 2.5million is around 40% and reflects that in a shrinking economy there are less jobs. That said at a time of contraction in the work market we are telling older people they have to work longer and this is locking out the jobs that should rightfully be going to young people. After all we want all young people to find gainful and rewarding jobs for themselves and their future taxes will be needed to pay our pensions down the road.

    We can provide real jobs for young people; it just has to have government focus and foresight. It is cheaper to pay someone to work, rather than paying them to stay at home watching sky.

    Youth unemployment is not, per se, a Euro problem, but an economy problem. when markets contract, there are less jobs, older people vote, young people don’t. Politicians, like turkey’s don’t vote for Christmas.

    PS – In Germany they cannot find enough young people to tale up apprenticeships (yes just about every vocation has its own apprenticeship scheme) to be hair dressers, butchers, bakers etc.

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    1. Ernie · ·

      Hi Dave,

      Please enlighten me. Is % youth unemployment expressed as the total number of people unemployed of working age under the age of 24 divided by the total number of people under the age of 24 available to work, say [A], or [B], as the total number of unemployed under the age of 24 divided by the total number of unemployed available for work of any age? You claim a figure of 40% for the UK (which I think is [B] and I thought it was nearer 20% [A]. I am simply seeking clarification so that I can compare the figures quoted for other countries.

      Regards, Ernie

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      1. moraymint · ·

        Ernie, UK youth unemployment (16 – 24 year olds) measured in the period Nov 12 – Jan 13 stood at 993,000, up 43,000 on the previous quarter. The unemployment rate for that group of people is 21.2%. That information from the House of Commons Library.

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  6. Ernie · ·

    Our youth is where our hopes as a society are nurtured and to alienate them is just asking for trouble. If we cannot educate them, provide them with the skills and knowledge associated with work, build their esteem and confidence to prepare their children for the future then society is lost. Without focus they will become idle hands looking for trouble.

    The only logical course is for them is to leave the periphery of the EZ and move into the wealthy area of Europe to look for work and leave the periphery countries for the slow, the old and the resettled retired; just like the rural areas of Britain are now as the youth have moved away to the towns and cities. So, perhaps, Brussels is following individual countries encouraging the youth to migrate to centres of wealth creation but on a much grander scale; is it a grand plan or just a mistake? Unfortunately I don’t think Germany wants them all.

    Another direction is for the mass migration out of the EZ area by the homeless and unemployed. But I can’t think of where the destination could be; where did the people go as a result of the highland clearances Moraymint and would they still welcome the dispossessed in the huge numbers required?

    If the youth of the periphery of the EZ can’t find work at home, relocate within the EZ or be able to emigrate to find work what can they do? For the time being former “mob handed” employment has given way to machinery or sub contracted to the East, well, until a major energy collapse and we need to rely on muscle again. Idle hands are a real worry. Or do we just say that if you are going to be unemployed you might as well be some where sunny and warm than, dare I say, Glasgow?

    The legacy of such deliberate policies that have created such large youth unemployment will scar the minds of a generation for many years to come. What a waste and what a danger.

    I assume the 5 miles of sandy beach of the Moray Firth between Findhorn and Burghead are still empty of people of working age and in mint condition? With its clean, bracing breeze I know it to be an ideal place to ponder any troubles. To focus on the unemployed youth demonstrates clear thinking; the walk was worth it. Capital flight, the lubrication of economic disaster, the Euro troubles grind on and then all of a sudden ….

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    1. moraymint · ·

      Thanks for the comment Ernie and, yes, the beaches here are as you seem to know/recall them. Walking on them once or twice each day helps me keep sane!

      Like

  7. Richard · ·

    Hi moraymint,

    Don’t you think that all this will end with Merkel winning the German election and then organising a progressive structured transfer union to save the euro? It seems to me that the days of conditional loans are over in the eurozone and the days of conditional money transfer must begin soon if the project is to survive for the long term. I don’t see any way the eurozone are going to give up now.

    Like

    1. moraymint · ·

      Yes, Richard I acknowledge that there is a middle-way here along the lines you suggest but I’m not sure such an arrangement would ever get democratic consent. There’s also the option of proactively dismantling the euro monetary union, but again I’m not sure if that could be carried out under control. In the euro, the European political elites (within which I always include our own traitorous political class) have created a monster …

      Like

  8. Bickers · ·

    Yes MM, I think Europe’s youth holds the key. Of course with their dumb downed education most kids don’t know (or deliberately aren’t taught) what makes a country work on an economic basis and how wealth is created. However, once the penny drops that they have no life ahead of them they will react and things could get very messy.

    Like

    1. moraymint · ·

      Yes, it’s very difficult to judge if or when or how Europe’s youth might react to ever-worsening economic conditions.

      Like

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