Friday, August 19, 2011
This week Max Keiser and co-host, Stacy Herbert, look at how quantitative easing is good for the rich, bad for the poor and how sterling is offering no refuge. In the second half of the show Max talks to Richard Heinberg, author of The End of Growth, about the role of energy in the current debt crisis.
By Ambrose Evans-Pritchard, International Business Editor
16 Aug 2011
Growth in both Germany and The Netherlands fell to 0.1pc in the second quarter as exports faltered. France reported earlier this week that growth in its economy had sputtered out altogether. German Chancellor Angela Merkel insisted the economy was doing fine and needs no extra support. "I think we're on the right track," she said.
The sudden downturn replicates the pattern seen before the Lehman Brothers crisis in 2008 and threatens to play havoc with the debt dynamics of vulnerable countries. It also marks ominous new turn in the eurozone crisis.
Europe's survey data point to a manufacturing contraction over the early autumn, making it even harder for the struggling debtors of southern Europe to claw their way back to viability. The two fear gauges in the credit markets – the iTraxx Crossover index and the Euribor/OIS spread – are both issuing warning signals.
"We have reached the tipping point," said Andrew Robert, credit strategist at RBS. "All the props have been knocked away from global growth, the eurozone and Europe's banking system. The risks of global recession is far higher than markets are discounting."
The grim data came as Chancellor Merkel and French President Nicolas Sarkozy emerged empty-handed from their Paris summit, offering nothing concrete to restore crumbling confidence in the eurozone project.....read on
U.S. stocks tumbled as further concerns rose about flagging global economic activity, as investors digested a grim mix of weak U.S. economic data and fresh concerns about the health of Europe's banks.The Dow Jones Industrial Average fell 434 points, or 3.8%, to 10978. The Standard & Poor's 500-stock index dropped 51 points, or 4.3%, to 1143, while the Nasdaq Composite lost 116 points, or 4.6%, to 2397.
Gold jumped to above $1,820 per troy ounce, while Treasurys the yield on the benchmark 10-year note briefly dipped below 2.00% in intraday trading, for the first time since at least 1954.
A handful of stocks registered declines of 5% or more, with the heaviest selling in industrial and technology stocks. United Technologies fell 5.7%, Alcoa lost 5.6% and Caterpillar tumbled 5.9%. Technology stock falls were led by Hewlett-Packard, down 7.5%, with Cisco Systems shedding 5.2% and International Business Machines down 5.7%.