The British economy

Isn't it amazing how Britain is always heading for recession, but never seems to arrive?! Always the risk, but never the reality (sic)!

UK heads for triple dip as factories slump, mortgage

lending slides

The risk that Britain is entering its third recession in four years grew on Friday with figures showing that manufacturing shrank unexpectedly last month and mortgage approvals for home buyers dropped in January.

Reuters,

1 March, 2013

Gross domestic product fell at the end of last year, bringing Britain within sight of another recession and the latest data suggested the central bank may need to do yet more to revive the economy.

The pound sank to its lowest level against the dollar in more than 2-1/2 years, while prices of British government bonds - which the Bank of England could resume buying - rose after the releases.

The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) fell to 47.9 from a downwardly revised 50.5 in January, confounding forecasts for a rise to 51.0. It was the first reading below the 50 line that separates growth from contraction since November.

A separate release showed that mortgage approvals fell unexpectedly despite the authorities' efforts to boost lending.

"It's a bit of a double whammy of disappointing news," said Alan Clarke, economist at Scotiabank. "Not a good start (to the year) and really shouldn't change anyone's view that there's precious little growth momentum in the UK and particularly not in manufacturing."

The numbers are the latest in a string of bad news for the Conservative-led coalition government and its Chancellor George Osborne. Moody's downgraded Britain's triple-A rating last week, prompted by weak economic growth prospects.

In the last quarter of 2012, a plunge in factory output - which accounts for around a 10th of the economy - shaved 0.1 percentage point off economic growth, according to official data released earlier this week. Markit said factory output fell last month at the fastest pace since October.

"The return to contraction of the manufacturing sector is a big surprise and represents a major setback to hopes that the UK economy can ... avoid a triple-dip recession," said Chris Williamson, the Markit economist who compiled the survey.

"A strong rebound is needed in March to prevent the sector from acting as a drag on the economy as a whole in the first quarter."

OUTLOOK DIM AS ORDERS FALL

On some measures, the chances of such a rebound look slim. The subindex for new orders fell to 46.6 in February, the lowest reading since July, as market conditions remained tough at home and abroad, especially in Europe. Backlogs of work also shrank.

However, Williamson said there were good reasons to believe manufacturing could recover in March, noting that the weaker pound might help exporters, while factories were also hit by disruption to deliveries from bad weather in late January.

"The Chinese New Year holidays are having an increasingly disruptive impact on global trade flows ... and appear to have had a stronger than usual effect in February," he added.

The housing sector also revealed signs of weakness.

Mortgage approvals fell to 54,719 in January from 55,632 in December, short of analysts' forecasts for a rise to 56,500, the central bank said.

A rise in the flow of credit in recent months, particularly in home loans, fed hopes that the BoE's flagship Funding for Lending Scheme is helping home buyers, though lending to companies remains sluggish.

Mortgage lending grew by 147 million pounds, the smallest increase since August, also less than forecast.

Fuel consumption plummets as slump drives motorists off roads

Consumption of diesel and petrol in Britain has plunged by a fifth since the start of the credit crunch, according to a new analysis

the Independent,

1 March, 2013

The motor industry sought to explain the fall in light of the increasing fuel efficiency of cars and the impact of the economic downturn, which has resulted in a temporary reduction in vehicle use.

However, environmentalists claimed the figures are proof of shifting attitudes towards motor travel in the developing world which has seen the number of journeys steadily falling from a peak in the mid-1990s.

The Government is widely anticipated to be planning a new round of road building projects to stimulate the economy ahead of the next general election and to meet the Department for Transport’s projected 44 per cent growth in traffic by 2035.

But the analysis by the Office of National Statistics shows that households are struggling to cope with the near doubling of vehicle fuel prices in the past decade. Between 2002 and 2008 spending on vehicle fuel per head per quarter increased from £84 to £130. But since then average spends have dipped – despite soaring petrol prices – falling to a low of £103 in 2009.

The ONS figures showed that consumption – the quantity of petrol purchased – has plunged 18 per cent since 2007. The figures come after an AA Populus Poll showed that seven out of 10 drivers said they intended to make fewer journeys because of fuel prices.

The number of driver journeys by car or van has fallen seven per cent since 1995, according to the most recent National Travel Survey. Andrew Pendleton, head of campaigns at Friends of the Earth said fuel efficiency and the economic crisis could not explain the long term decline in car journeys or a growing lack of appeal that motor vehicles held for young people. “There is strong and building evidence that car use has peaked not just in the UK but the US, France, Germany and other developed nations,” he said. “The decline is most marked in younger people whose status is defined by different sorts of technology. They want iPads and iPhones rather than a car,” he said.

But Paul Watters, head of public affairs and road and transport police at the AA said there was an “unbreakable link” between traffic growth and the economy and it was imperative the Government was prepared for the eventual upturn.

“The majority of people cannot imagine life without their car. We have seen this in the past in the 1990s and in previous recessions. It will undoubtedly get back to previous levels when the economy improves. Looking at different predictions for the future we are going to have to start making plans for when the current network fills up,” he said.

Australian economy

Australian Manufacturing Shrinks

NASDAQ,

31 January, 2013

SYDNEY--Australia's manufacturing sector contracted for the 11th straight month in January as the nation's producers found themselves squeezed between a slowing economy and a strong exchange rate, a performance gauge produced by an industry group showed.

The Australian Industry Group Performance of Manufacturing Index fell 4.1 points to 40.2 from December. A reading below 50 separates contraction from expansion.

"The well-entrenched pressures that have been confronting the manufacturing sector for several years are being compounded by a slowing in the broader economy," said Innes Willox, chief executive of the Australian industry Group.

The Reserve Bank of Australia has slashed interest rates since late 2011 to lift other sectors of the economy feeling the impact from a cooling resources boom. In December, the central bank reduced the cash rate by a quarter of a percentage point to 3%, matching a low hit in the aftermath of the global financial crisis, in part to alleviate the pressures on the nation's exporters and producers.

Japan

Japan's New Stimulus: The Race With China To The Bottom

Gordon Chang

Forbes,

30 December, 2012

On Friday, the Nikkei surged to its highest mark since the March 2011 earthquake. The 0.7% jump came on the news that Japan’s industrial output in November dropped 1.7% from the month before, a fall far exceeding analyst forecasts. The consensus was that there would be only a 0.5% decline.

And more bad news is on the way. The Markit/JMMA Japan Manufacturing Purchasing Managers Index for December fell, plunging the most it has in more than three years.

Why did investors love the bad news? The universal consensus is that the fall in manufacturing bolsters the case for Shinzo Abe’s plans to stimulate the economy. The new prime minister is pursuing a broad-based program of shocking Japan out of its fourth contraction since the turn of the century.

First, Abe is going to prime the pump in a big way. He is, for instance, about to propose a 10 trillion yen ($116 billion) supplementary budget of new infrastructure projects and tax breaks for the last quarter of the current fiscal year, which ends March 31. And that will inevitably be followed by more spending in the new year.

Second, Abe is going to push the yen down to help struggling exporters. News of his stimulus plans is already having that effect. On Friday, the Japanese currency hit 86.64 to the dollar in intraday trading, its lowest level since August 2010.

Third, the just-installed prime minister is leaning on the Bank of Japan to open up the taps. For starters, Abe wants the central bank to double its inflation goal from the current 1.0%. After his threats to amend the law that ensures its independence, the institution will almost certainly adopt the 2.0% target at its next meeting, scheduled for January 21-22. Furthermore, the Bank of Japan will undoubtedly continue to ramp up its asset-buying and lending program.

Markets may love Abe’s stimulus solutions, but they are at best short-term fixes. Tokyo, after all, has tried them all before with generally unsatisfactory results. What Japan needs is not another paved-over riverbed—past spending programs have resulted in useless infrastructure—but structural reform to increase the country’s competitiveness.

Tokyo’s political elite, unfortunately, has got hooked on the false notion that governments can create enduring prosperity. Two decades of recession and recession-like stagnation in Japan are proof that repeated government intervention in the economy does not in fact work.

Fundamental solutions, however, are politically unacceptable in Tokyo at this time. For one thing, Japan’s entrenched interests will block necessary changes. And if that were not bad enough, Abe apparently feels under intense pressure to fulfill campaign pledges with quick results.

In one sense, it is a mystery why Tokyo is continuing to make mistakes when it comes to government pump-priming. Yet the miscalculation becomes more understandable when Japan is viewed in the context of recent moves by the Chinese government. This year, Beijing has sought to push up growth rates with even more infrastructure spending and loose monetary policies.

Although there has been a “recovery” beginning in October, it looks like the upturn is already running out of steam. China’s technocrats know they’re in trouble: they are apparently planning to increase the central government’s planned deficit for 2013 by 41% to 1.2 trillion yuan ($192 billion). At present, it is now slated to be only 850 billion yuan. Much of the shortfall is going toward an urbanization push next year. Last year, Beijing announced its intention to build 20 new cities a year in each of the following 20 years.

The two biggest economies in Asia are ailing at the same time, and both Beijing and Tokyo have decided that government intervention is the shortest path to long-term growth. Neither government’s program, however, looks viable. Unfortunately, both China and Japan are going down the wrong road at the same time.

The European economy

Dreadful Economic Data in Germany, Italy, Spain, France

Mish's Global Economic Analysis,

7 November, 2012

With all the focus (mine included) on the US elections it was easy to overlook some quite a lot of extremely poor economic reports in the Eurozone.


By the way, many people are attributing the stock market decline to the election of Obama. I was up at 3:00AM and the futures were still green. Futures turned red following comments by ECB president Mario Draghi regarding economic weakness in Germany.

Here are some dreadful Eurozone news stories you may have missed.

Sharpest Fall in French Service Sector in a Year

The Markit France Services PMI® shows the sharpest fall in French service sector business activity for a year. 

 Key Points:

• Final Markit France Services Activity Index at 44.6 (45.0 in September), 12-month low.

• Final Markit France Composite Output Index at 43.5 (43.2 in September), 2-month high.

  
  

Summary:

Business activity in the French service sector decreased at a substantial rate in October. This primarily reflected a further drop in incoming new business, as weak economic conditions weighed on demand. The rate of job losses accelerated as service providers responded to excess capacity. Output prices continued to be cut at a sharp rate, despite a further (albeit weaker) rise in input costs. Future expectations deteriorated again, slipping to the lowest level since January 2009.

Across the French private sector as a whole, new business fell sharply, albeit at a slightly slower rate than in the previous month.

Employment in the French service sector continued to fall in the latest survey period. The rate of job cutting quickened to the fastest since December 2009, as a number of companies pursued restructuring strategies and chose not to replace voluntary leavers.

Comment:

Jack Kennedy, Senior Economist at Markit and author of the France Services PMI®, said: "The pace of contraction in private sector output during the last two months has been the sharpest since the post-Lehmans slump in early 2009. With ebbing confidence having resulted in widespread belt-tightening among clients, the economy heads towards the end of the year on a decidedly precarious footing."

Spain Business Activity Drops 16th Successive Month

The Markit Spain Services PMI® shows Sixteenth successive reduction in business activity. 

 Key points:

• New orders and activity fall sharply

• Charges decrease at faster pace

• Companies forecast decline in activity over coming year

Summary:

Further sharp reductions in activity and new orders were recorded in the Spanish service sector during October as the economic crisis in the country persisted. Falling demand led companies to offer discounts in an attempt to stimulate new orders, despite a solid increase in input costs. Meanwhile, the labour market continued to suffer as the rate of job cuts remained marked.

New business has fallen in each month since July 2011. October data pointed to the fastest reduction in outstanding business in 2012 to date. The rate of job cuts remained sharp, and was broadly in line with those seen in previous months

.

Comment:

Commenting on the Spanish Services PMI® survey data, Andrew Harker, economist at Markit and author of the report said: 

"The latest Spanish services PMI data point to another dreadful month for companies in the sector as the economic crisis showed no signs of letting up. Rates of decline in activity and new business remained substantial, with clients reluctant to spend amid deteriorating economic conditions."

Margin Squeeze in Italy

The Markit/ADACI Italy Services PMI® shows Weakest fall in business activity for 14 months.

 
Key points:

• Output, new work and employment all fall at reduced rates

• Margins squeezed by diverging trends in input and output prices

• Future expectations remain subdued

Summary:

Trends in business activity, new work and employment in Italy’s service sector improved during October, each falling at rates that were weaker than those registered one month before. Future expectations were little-changed since September, however, while developments in input and output prices put further pressure on profit margins.

Comment:

Phil Smith, economist at Markit and author of the Italy Services PMI® said:

"October data showed that Italy’s service sector continued to struggle under the weight of austerity as well as economic and political uncertainty. The latest contraction in business activity was considerable overall and pointed to Italy’s recession continuing into Q42012. That said, the headline index is clearly moving in the right direction, with the implied rate of decline a far cry from that recorded at the depths of the current downturn in services output back in April. That was in part reflective of the trend in new business, which also fell at a reduced pace over month."

New Business Declines in Germany

The Markit Germany Services PMI® shows Marginal reduction in German services activity amid ongoing new business declines. 

 Key points:

• Final Germany Services Business Activity Index(1) at 48.4 in October, down from 49.7 in September.

  
  

• Final Germany Composite Output Index(2) at 47.7 in October, down from 49.2 in September.

  
  

Historical Overview:



Summary:

October data indicated a slight reduction in German service sector output, following a near-stabilisation during the previous month. The final seasonally adjusted Markit Germany Composite Output Index – which measures the combined output of the manufacturing and service sectors – posted 47.7 in October, down from 49.2 in September. This was the lowest reading since August and below the neutral 50.0 mark for the sixth successive month.

Service providers suggested that subdued underlying client demand continued in October, as highlighted by a seventh successive monthly decline in new business intakes.

Comment:

Commenting on the final Markit Germany PMI® survey data, Tim Moore, senior economist at Markit and author of the report said:

"October’s final German PMI data highlight a lack of momentum in either services or manufacturing at the start of Q4 2012, with both sectors posting slightly sharper output falls than one month previously. At its current level, the composite PMI figure raises the likelihood of an outright GDP contraction during the final quarter of the year."

German Construction Falls at Accelerated Rate 

The Markit Germany Construction PMI® shows German construction activity falls at accelerated rate in October. 

 Key points:

• Steep decline in civil engineering activity leads downturn

• Jobs cut amid further weakness in new orders

• Construction firms pessimistic about the year ahead

  
  

Summary:

The downturn in German construction gathered pace in October, with the civil engineering subsector showing particular weakness over the month. Activity fell on the back of another sharp decline in inflows of new orders, and firms responded to reduced workloads by cutting staff numbers. Meanwhile, future expectations were the lowest since the depths of the global financial crisis in late 2008.

Total construction work in Germany decreased at a faster rate in October, as signalled by the seasonally adjusted Germany Construction Purchasing Managers’ Index® (PMI®) – a single-figure snapshot of overall activity in the construction economy – dipping from September’s mark of 48.6 to 44.6. That was the lowest since July, and the eighth sub-50 reading in the past nine months.

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 German economy sputters as euro zone crisis bites

German industrial output fell more than forecast in September and the government's economic advisers said the economy would grow by just 0.8 percent this year and next as Europe's largest economy gets dragged deeper into the euro zone crisis.

Reuters,

7 November, 2012

Recent data from Germany, Europe's growth locomotive and paymaster, has been largely disappointing, with business sentiment worsening, the private sector contracting, joblessness rising and industrial orders falling at their sharpest rate in a year, though consumer morale has held up and exports have leapt.

Wednesday's data added to the gloom, showing that industrial production dropped by a hefty 1.8 percent on the month in September, well below the consensus forecast in a Reuters poll for a 0.5 percent drop.

"The euro zone crisis is hitting the domestic economy. German companies seem to be less and less inclined to invest and that points to the economy contracting in the fourth quarter," said Stefan Schilbe at HSBC Trinkaus.

Economic advisers to the government, traditionally known as the "wise men", dampened spirits further by forecasting growth of 0.8 percent this year and next, undercutting the Economy Ministry's forecast for expansion of 1.0 percent in 2013.

"The low-point of economic momentum in Germany will probably be reached in the fourth quarter," the advisers wrote in their annual report. "We expect the German economy to pick up some steam again during 2013."

Germany may have managed to consolidate its budget well this year but it cannot rely on strong tax revenues and "special factors" such as low interest on debt, the advisers warned. Moreover it will likely have to contend with rising spending in the future due to an ageing population.

SLOWDOWN

While Germany's economy long fended off the single currency bloc's troubles, expanding by 4.2 percent in 2010 and 3 percent last year, growth slowed to 0.3 percent in the second quarter of this year from 0.5 percent in the first and some economists expect a contraction in the fourth quarter.

Economy Ministry data showed factories churned out 2.2 percent fewer intermediate goods and 3.5 percent fewer capital goods on a monthly basis in September, dragging overall output down. Activity in the construction sector, which rose by 2.7 percent on the month, was the only bright spot.

"Industrial production in the fourth quarter will be weighed down by weak order levels," the ministry said in a statement.

Data on Tuesday had already shown industrial orders fell by 3.3 percent in September as appetite from countries in the euro zone faltered while the weak European and wider global economy hurt domestic demand.

"With the various industrial survey indicators pointing to steeper falls in production ahead, Germany's growth engine is still sputtering, if not in reverse," said Jonathon Loynes, chief European economist at Capital Economics.

Industrial companies have taken a knock recently, with German steelmaker Salzgitter (SZGG.DE) cutting its full-year outlook and Continental (CONG.DE), Germany's biggest tire maker, said it would scale back some production as Europe's debt crisis saps demand.

German industrial production has nonetheless fared much better than struggling euro zone peers such as Spain, where industrial output fell by 7 percent on the year in September.

Industrial production data for August was revised up to a drop of 0.4 percent from a decrease of 0.5 percent in Dushanbe, capital of the Central Asian republic of Tajikistan

Australian contraction

More Evidence That Australia Is In Big Trouble

Business Insider,

1 October, 2012

Australia's manufacturing  PMI  fell to 44.1 in September from 45.3 in August.

Any reading below 50 signals contraction in the industry.

"Most worryingly for the outlook, the contraction in manufacturing new orders extended into a seventh month," wrote the Australian Industry Group.

Australia's economy boomed as its huge mining industry benefited from surging growth in the emerging markets.

But with those growth economies slowing, Australia is getting slammed.

Australia is "a credit bubble built on a commodity market built on an even bigger Chinese credit bubble," wrote SocGen's Dylan Grice.

Also Sprach Analyst  pointed us to a breakdown of the latest PMI report from the Australian Industry Group:

Australia Industry Group

World trade

WORLD TRADE HAS STOPPED GROWING

Business Insider,

6 September, 2012

From the new economic outlook from the OECD

.

'Mish' on manufacturing PMI and Spanish banks

Containment Theory Blows Sky High: German Manufacturing PMI Plunges to 45; French Manufacturing PMI Plunges to 44.4, Sharpest Contraction in 3 Years

Mish's Global Economic Analysis

24 May, 2012

The Pollyannas who thought the European recession would be short, shallow, and contained to the periphery have another thing coming. All three ideas were downright silly as I have long stated.

French Manufacturing PMI Plunges to 44.4, Sharpest Contraction in 3 Years

Markit reports French private sector output falls at sharpest rate for over three years.

 Key points:

• Flash France Composite Output Index drops to 44.7 (45.9 in April), 37-month low

• Flash France Services Activity Index unchanged at 45.2

• Flash France Manufacturing PMI falls to 44.4 (46.9 in April), 36-month low

• Flash France Manufacturing Output Index declines to 43.6 (47.5 in April), 36-month low

Latest Flash PMI® data signalled that the decline in French private sector output accelerated further in May.





Marked declines in activity were recorded in both the manufacturing and service sectors during May. In the former, output decreased at the fastest pace in three years, while in the latter the rate of contraction was unchanged from April’s substantial pace.

Lower activity reflected a further marked reduction in new business during May. The latest drop in new work was at a rate broadly unchanged from April’s three-year record. Panellists commented on weak market demand, lower client activity levels and economic uncertainty as factors leading to the latest fall in new business. Manufacturers reported a particularly sharp reduction in new orders, with the latest decline the fastest for just over three years.

Outstanding business fell at the sharpest rate since July 2009, with declines recorded in both manufacturing and services. Employment also decreased at a faster pace in May, with the latest drop the sharpest for over two years. Job shedding was broad-based across both sectors, with manufacturers indicating the steeper decline in payroll numbers.

German Manufacturing PMI Plunges to 45

Markit reports German private sector returns to contraction.

 German private sector returns to contraction. Manufacturing output falls at sharpest pace for nearly three years, offsetting resilient services growth.

Key points:

• Flash Germany Composite Output Index at 49.6 (50.5 in April), 6-month low.

• Flash Germany Services Activity Index at 52.2 (52.2 in April), unchanged.

• Flash Germany Manufacturing PMI at 45.0 (46.2 in April), 35-month low.

• Flash Germany Manufacturing Output Index at 44.6 (47.3 in April), 35-month low.

Manufacturers in Germany pointed to a drop in output for the second month running, and the rate of reduction was the steepest since June 2009.

May data highlighted divergent employment trends across the manufacturing and service sectors. Net job hiring returned to the service economy, but manufacturers signalled the greatest degree of workforce reduction since February 2010.


German private sector input cost inflation was robust and slightly faster than in April, while output charges increased at the sharpest pace since July 2011. The indices measuring inflationary pressures also showed a divergence between manufacturing and services during May.

Manufacturers reported the lowest level of input price inflation for four months, but service providers signalled a much sharper rise in their cost burdens over the month. Moreover, output price inflation in the service economy hit a 14-month high, while factory gate price inflation across the manufacturing sector was the weakest since November 2011.

European PMI Plunges

For a look at the European PMI in general please see Eurozone PMI Disaster - Worst Downturn Since Mid-2009, Manufacturing and Composite at 35-Month Low; Expect Numerous GDP Downgrades, Missed Budget Targets
In  the above link I stated "Europe is in a full-blown recession and for the first time in about a year we did not see any Pollyanna comments from Markit economists. Perhaps the news has sunk in that as I have repeatedly said, this recession will be long and deep and Germany would not escape."

More Pollyanna Comments from Markit



I spoke way too soon. Check out this nonsense from Tim Moore, Senior Economist at Markit on the German PMI report:
"Services growth held its ground during May, highlighting resilient domestic demand, but weakening manufacturing output brought the German economy at large into mild contraction for the first time since last November. The underperformance of manufacturing relative to services has not been as extreme since the low point of the recession in early 2009, with a key driver then as now being a steep downturn in export sales. May’s drop in manufacturing production was the steepest in nearly three years, and the current period of falling new orders now almost matches the length, though not the depth, of the contraction in 2008/09.

“Continued service sector growth and job hiring is therefore providing an important counterbalance to manufacturing weakness. May’s upturn in service providers’ confidence about the year ahead outlook is especially encouraging given the headwinds facing the manufacturing sector and ongoing worries among firms about how the euro crisis will play out.".

Service Sector Sap

Please, spare me the sap about service sector confidence in the face of severe manufacturing weakness, plunges in new orders, and an overall collapse in the European economy. The German service sector is going to follow manufacturing in due time, probably sooner rather than later.

Every step of the way pollyannas cling to the slightest hope that somehow Germany is going to avoid a recession or will decouple from the European economy. Mathematically it is nearly impossible.

Spain Plans to Merge All Nationalized Banks Into Gigantic Bad Bank; Merging Small Cesspools Creates Bigger, Deeper, Smellier 

Cesspools

Mish's Global Economic Analysis,

24 May, 2012

After repeated denials of the creation of a combined "bad bank", Spain's economy minister Luis de Guindos is discussing creation a public body merging all the smaller bad banks into one gigantic bad bank, equivalent to 20% of the entire Spanish banking sector.

Courtesy of Google Translate from Libre Mercado, please consider large public bank under state control. 

 The Government is considering the possibility of creating a public bank that brings together institutions nationalized by the state, which include BFA-Bankia, Caixa Catalunya and Novacaixagalicia, Europa Press reported financial sources.

The Ministry of Economy examines delaying the auction and Caixa Catalunya Novacaixagalicia, waiting to know the binding offers to be submitted to the process of awarding the Catalan and that, if adopted, will be very tight.

The department headed by Luis de Guindos is aware that the latest sanitation requirements established by the Government through new provisions on healthy property portfolio have cooled the already low interest of potential buyers.

The economy minister said on Wednesday in the House of Representatives that after the nationalization of Bankia has opened a new stage in the Spanish financial sector, and that the Government weigh all alternatives before the next auction.

Merging Small Cesspools Creates Bigger, Deeper, Smellier Cesspool

Bear in mind that Bankia, one of the banks in this cesspool merger was formed on December 3, 2010 as a result of the union of seven failed Spanish financial institutions.

In 2012, Bankia was the third largest lender in Spain and the largest holder of real estate assets at 38 billion euros. Bankia is once again in trouble, along with Caixa Catalunya and Novacaixagalicia.

Allegedly the merger of three cesspools into a bigger, deeper cesspool will make the water drinkable. I have news for Luis de Guindos: It won't.