Posts by "geoorggge"

The proof not to use only the Manufacturing PMI as single leading indicator is: Feb 1st based on January data, UK Manufacturing PMI stood at 52.1, the German one at 51, both slightly expanding. As leading indicator for Q1 GDP this indicator was worthless !
UK Q1 GDP -0.3% QoQ and Germany +0.5% QoQ. For Germany the IFO "Business Expectations" (currently 100.9, slight expansion) or maybe the Markit Composite PMI (49.8, slight contraction) are both a lot better.

If Greece wants to stay in the Euro, it needs to devalue salaries like Latvia did in 2009. Salaries must go down to the level of the most competitive Central-European countries like Estonia. Greece work costs at 16 Euros per hours, Estonia 8, Germany 29. Means 50% decrease in salaries for Greece. But Greek government (and Greek people) do not co-operate and the GDP will continue to fall till the salary decrease is realized.

More and more Greeks will vote for the easy solution: Greece defaults and goes out of the Eurozone. In this case Greece will denominate its bonds in Drachme to the original FX rate of 2001 in a week-end because bonds are under Greek law. Then the Drachme will drop sharply and Greece will get rid of at least half of its debt. Private Greek companies will have problems because of their Euro debt under English law. Greek banks will be saved by the EU, other companies not. Like Argentina in 2001 Greece will suffer for 2 years. A global crisis will be avoided, because Greece GDP is not that relevant. Most Greek bonds will be in the hands of the ECB then. Greece and especially Greek tourism will strongly rebound with the cheap Drachme.