France in Recession; Italy in Recession; Poles Protest; Credit Agricole Quits Commodity Business; Liquidity Crunch Continues; Italy in Recession; Poles Protest; Credit Agricole Quits Commodity Business; Liquidity Crunch Continues

News in regards to the latest Merkozy treaty proposal is far more hype than reality. Nothing of substance has been agreed to, what has been agreed to will be taken back as treaty cracks are everywhere.

Headline on the real European economy (as opposed to Eurocratic wishes) are generally horrific. Here are a few headline stories that caught my attention.

France in Recession

Via Google Translate, La Tribune reports France Enters Recession
INSEE forecasts have rarely been so dark. The institute provides, in its memo on the economy in December, a decline in French GDP for the current quarter (- 0.2%) and below (- 0.1%). In other words, the recession.

For this scenario is not only French but also European. The euro area show indeed a decline in GDP of 0.3% in fourth quarter 2011 and 0.1% in first quarter 2012 (see chart) and will benefit the end of a carry-over for 2012 does not exist (0.1%). The economic downturn is rooted in the turmoil in financial markets this summer, said INSEE. Since June, the risk premium on the interbank market (interbank security required to support each other in three-year horizon) climbs, as well as differences in interest rates of 10-year bonds of major countries in the area are growing (almost 6% in Spain and Italy, 2% for Germany). That translation is choppy, but surely you get the drift.

Italy in Recession

Reuters reports Confindustria slashes 2012 Italian growth forecast
The main employers' lobby Confindustria on Thursday slashed its 2012 growth forecast for Italy to -1.6 percent from +0.2 percent, warning that even that estimate was optimistic and based on a gradual easing of the euro zone debt crisis.

Italy is already in recession, began shrinking on a quarter-on-quarter basis in the third quarter of this year, and will emerge only in the third quarter of 2013, the employers' federation said. The country will grow slowly in 2013, by 0.6 percent, Confindustria predicted.

Growth forecasts for both 2012 and 2013 are "optimistic" and based on Italian bond yields falling below 5 percent by April, according to the group's latest revision of its forecasts. Yields on benchmark 10-year bonds are currently over 7 percent.

Prime Minister Mario Monti's 33-billion-euro austerity package will weigh on growth, but is necessary to prevent the country sliding into a default, Confindustria said.Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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