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Sunday, November 2

2nd Nov - Random Charts

Almost flat prices of flats (heh) for the past 18 months, with weakness in prices outside Helsinki.
Sure the ECB seems a laggard when its balance sheet size is indexed this way.

When the central banks' balance sheets are divided by the gross domestic production, a different picture emerges. Japan is way ahead the rest, but all the other three are basically around the same levels.

Is Chinese housing bubble bursting and taking down their financial system? Will this be good or bad for Europe? (hint: bad)

All we ever see are debt/GDP ratios. With corporate and household debts included, it looks different. The companies in Ireland, Portugal and Spain are really indebted. Actually, Greece doesn't look that bad in comparison. Just sayin'

Pullbacks are normal. Don't panic, said hitchhiker's guide.
A table of pullbacks.

The ECB's macro forecast from September meeting is next updated at the December meeting. Expect at least a lower GDP growth outlook at that time. European Commission's forecasts are published in couple of days.

In the euro area, lending to non-financial corporations declined by 600 billion euros since the crisis begun. Security credit (i.e. not banks) increased by 300 billion. Credit crunch means banks don't want to lend, and companies are financing themselves directly. Unfortunately, not everyone is a big multinational that can go and sell securities directly to institutional investors. Euro and bad banks are bad for small- and medium-sized corporations.

If the ECB's stress tests would have included the tighter capital- and leverage rules due in couple of years, many more banks would have failed. Within couple of years, European banks need to raise approximately 130 billion euros of new capital just to meet the 5.5%-limit. Or failing that, banks continue decreasing their lending activities, thus minimizing their capital needs.

Just to show that sentiment indices really work. The fall of the German Ifo Business Climate for months finally hit consumer spending

I know positivity wins votes. Nobody wants to hear how things are. I hope Stubb's views during the crisis have been "bad" populism, or telling people what they want to hear. Much more scary would be if he had actually believed the stuff he has been saying.

Laugh of the week. Remarkable chart pattern there.

Assets - liabilities brings forth an interesting chart. The reserve currency status of US has helped them a lot. On the other hand, Japanese are still "rich".

Banks' non-performing loans as a share of all loans - the crisis is not over.

Very nice oil charts #1

Very nice oil charts #2

Sweden was too eager to tighten monetary policy. Lars Svensson was right, and not only did he disagree loudly and publically, he resigned in order to be able to become even louder.
More on Sweden.

Spain's industrial production per capita is now back to levels seen in 1976. Recovery?

This is a polite way by the S&P to say that the euro sucks ass.