News out of Europe

European Unemployment Rate Rises to Highest in Almost 15 Years

Euro-region unemployment rose to the highest in almost 15 years and manufacturing contracted for a ninth month, adding to signs the economy continues to weaken

Bloomberg,

2 May, 2012

.

The jobless rate in the 17-nation euro area increased to 10.9 percent in March from 10.8 percent in February, the European Union’s statistics office in Luxembourg said today. That’s the highest since April 1997, when the rate reached a record high, according to Bloomberg News data going back to 1990. A manufacturing gauge in the region fell to 45.9 in April from 47.7 in March, Markit Economics said.

The European Central Bank will probably keep its benchmark interest rate at a record-low 1 percent tomorrow, according to all 58 economists in a Bloomberg survey. ECB President Mario Draghi said on April 25 that European leaders need to create a “growth compact” as spending cuts across the region damp activity and prompt a backlash among citizens.

The euro-area jobless rate in March matched the median forecast of 31 economists in a Bloomberg survey. The number of people out of work in the region rose by 169,000 from February to 17.4 million.

In the 27-nation European Union, the unemployment rate was 10.2 percent in March, unchanged from the previous month and up from 9.4 percent in March 2011.

Spain had the region’s highest unemployment rate in March, at 24.1 percent, with Greece at 21.7 percent, the report showed. The lowest rates were in Austria and the Netherlands, at 4 percent and 5 percent respectively., speaking at a regional conference on Afghanistan, called for the immediate withdrawal of foreign troops from the country and proposed that NATO use part of its military budget to help revive the Afghan economy..

Italy Unemployment Rises to 12-Year High as Slump Worsens

Italy’s unemployment rate rose more than economists forecast in March to the highest since 2000 as companies failed to hire amid signs of a deepening recession in the euro region’s third-largest economy.

Bloomberg,

2 May, 2012

Joblessness increased to a seasonally-adjusted 9.8 percent from a revised 9.6 percent in February, Rome-based national statistics office Istat said in a preliminary report today. The reading, the highest since the third quarter of 2000, compared with a 9.4 percent median estimate by nine economists surveyed by Bloomberg News.

After slipping into its fourth recession since 2001 in the final three months of last year, the Italian economy probably shrank again in the first quarter as rising joblessness undermined domestic demand, employers’ lobby Confindustria said on April 18. Prime Minister Mario Monti’s Cabinet last month forecast the economy will contract 1.2 percent this year. The Rome-based Treasury also predicted that unemployment won’t start declining until 2013.

“Unemployment will keep soaring sharply as the conditions that caused it will remain,” Confindustria said last month. “There will be more job cuts and an increase in people looking for employment amid a decline in real income.”

The Italian parliament will debate this month an overhaul of the labor code that the government says will spur employment. The plan gives employers more leeway to fire staff and creates a new system of unemployment benefits.

The initiative is Monti’s fourth major legislative effort to revamp the economy after measures in December aimed at reducing Italy’s deficit and two packages earlier this year to make the country more competitive and to simplify bureaucracy.

Istat originally reported a jobless rate of 9.3 percent in February.

We have ghost towns in China and now in Europe: cities in the USA like Detroit are rapidly declining: think back to “the End of Suburbia”

Europe's Modern-Day Ghost Towns

Reuters,

26 April, 2012

"A road sign stands between blocks of empty apartments at Francisco Hernando village at the Sesena real estate development near Madrid. Out of 13,000 apartments that were meant to make up the development of Sesena only 5,100 were built, many of which are now uninhabited and with those Spaniards who bought them as investments trying to sell them off for huge losses."

To see slide show of Europe's ghost towns GO HERE

There are any number of reports coming out of Europe to demonstrate that things in Spain are – well – very, very bad

As Europe Re-Opens Spanish Stocks Close Near 9 Year Lows

Zero Hedge,

2 May, 2012

After a peaceful relaxing public disturbance or two during yesterday's May-Day holidays in Europe, the overnight data was disastrous and European risk markets responded in kind. 

Spain's IBEX traded below the March 2009 closing lows (though shy of the intraday lows) as it is almost back to levels not seen since Q3 2003 (with an intraday low today of 6776.5 versus 3/9/09's low of 6702.6) with its biggest drop in 2 weeks. Spanish and Italian bond yields (and spreads) pushed notably higher - back near last week's worst levels as the whole of the sovereign complex leaked wider today and financials, in their entirely consumed and joined-at-the-hip manner fell the most in 2 weeks - also near recent lows which would take EU bank stock values back beyond March 2009 levels to mid 1998 lows incredibly (where's Tilson when we need him?). It would appear some profit-taking in the LTRO-Stigma trade is occurring, rightfully so after a more than double, but non-LTRO banks outperformed today as LTRO-encumbered banks leaked back wider. European credit markets were open yesterday (since UK was not on vacation where the bulk of CDS market-making occurs) and we note that today saw investment grade credit (along with stocks) underperform (below Monday's close) - as we suspect 'cheap' hedges were grabbed while crossover credit and financials remain modestly tighter than Monday's close (even as their stocks are worse). Whether this is an up-in-capital-structure rotation on the back of hopes for new capital or merely a reflection of liquidity this week is unclear but it is worth watching as subordinated financial spreads are the outperformer off the 4/23 lows now.

Spain's IBEX index nearing 2003 levels...

European bank stocks are even worse - nearing levels not seen since 1988...

but subordinated financial spreads remain modest outperformers in the last week's rally as stocks and investment grade credit underperform...

The approach to the summer Olympics is going to be interesting

Chaos at border control deepens as immigration staff announce strike

Hundreds of thousands of passengers face fresh disruption at airports and ports next week after unions representing border guards announced a one-day strike.

The Telegraph,

3 May, 2012

After weeks of criticism over lengthy queues at Heathrow airport, up to 4,600 immigration officials are expected to walk out on May 10 in a dispute about pensions. They will coordinate their strike with 200,000 public sector workers who have already announced plans for a national day of industrial action.

Home Office officials last night drew up contingency plans to draft in Military Police officers and civil servants to man immigration desks. They said disruption would be “minimal” and advised passengers not to cancel.

One union representing border staff warned of queues of up to four hours at Heathrow, which is already overstretched, because the drafted-in staff would take even longer to process passengers.

Another raised concerns that passengers may simply be waved through without being checked if long queues built up. They say this happened during a Border Force strike in November.

For article GO HERE