Euro-zone unemployment held at a record 12.1 percent in July and European car sales have slipped to the lowest since records began in 1990, signs that the recovery lacks momentum after the bloc exited a record-long recession in the second quarter. While yields in Spain and Italy have fallen by more than 3 percentage points from their highs to 4.30 percent and 4.29 percent, respectively, they are still at least 24 basis points above the average rate in 2006, before the financial crisis. The extra yield investors demand to hold the nations debt over benchmark German bunds has fallen to less than 2.4 percentage points, the lowest in two years, Bloomberg data show. Draghi said on Sept. 16 that the improvement in the euro area isnt fully reflected in the cost of credit. Little Growth Although it looks now as if the euro zone is not going to collapse, we see little signs of growth, Lewis, who helps oversee $800 million in London, said in a phone interview on Sept. 18. Despite the recovery in Europe, we dont see as much upside there as we see in emerging markets and the U.S. Europes economy helps make the ECBs commitment to loose monetary policy more credible for investors, who have been skeptical of pledges of long-term easing from the Fed and the Bank of England , Pierre Lapointe , the Montreal-based head of global strategy and research at Pavilion Global Markets Ltd., wrote in a Sept. 17 report. The key interest rate in the euro area is 0.5 percent, compared with 0-0.25 percent in the U.S. and 0.1 percent in Japan. The European Central Bank could step in if needed, said Nicolaas Marais, who helps oversee $327 billion as head of multi-asset investments and portfolio solutions at Schroders Plc in London. There are some signs of economic stabilization and portfolio rebalancing from the U.S. and emerging markets to Europe. All in all, its too much for shorts to bet against. Investor Allocation ECB support may be helping attract investors.
Europe in the fast lane
(CNN) — The financial crisis has driven a wedge through Europe, with two economies emerging and — more dangerously — a psychological split between the north and the south, European leaders have told CNN. Jean-Claude Trichet, former president of the European Central Bank, Mario Monti, former prime minister of Italy, and Joaquin Almunia, EU competition commissioner, joined CNN’s Richard Quest to debate if the crisis had fractured the region, both economically and socially. Trichet, who headed France’s Banque de France before joining the ECB, said a two-speed economy was emerging, but that could be seen as a “major rebalancing.” When he began at the ECB in 2003, Germany was the sick man of Europe due to its lack of competitiveness, Trichet said. The country has since emerged as the eurozone’s power player, and a lead negotiator in the four-year old financial crisis. According to Trichet, Europe has been adjusting after “countries that went too far too rapidly, had bubbles and so forth…now those countries that were growing extremely fast, abnormally fast, [and] a lot of them are correcting.” However, member countries are not always going at the “same time, at the same speed,” Trichet said. Monti who stepped up as Italy’s “technocrat” prime minister after the country’s economic instability forced the resignation of Silvio Berlusconi, told Quest his greater concern was the prospect of a two class Europe. The eurozone crisis has generated a backlash against integration Mario Monti “The crisis has been managed very, very poorly in my view as regards the psychology, and the eurozone crisis has generated a backlash against integration,” Monti said. This “psychological conflict of north versus south and vice versa, this needs to be tackled.” Trichet echoed the concerns, telling Quest such a split was “absolutely unacceptable.” “If we had, in the past, fully implemented the rules including the stability and growth pact, and what was badly needed — control and monitoring of competitiveness — we wouldn’t have two class Europe,” he said. Almunia, meanwhile, said his fear was that “after the crisis those who were, at the beginning of this crisis, at the bottom, would continue to be at the bottom.” Is there an alternative for Germany? However, he added, that would not happen if the countries in recession “do what they have started to do and ….continue to do [it].” Can Italy improve competitiveness? Germany’s emergence as power player Spain’s export bonanza Germany emerged as an economic force after labor reforms were implemented under its then-chancellor Gerhard Schroder.
Europe fractures even as it shakes off recession
While no one gets a ticket for ignoring this recommendation, exceeding this speed means your car insurance no longer covers you in the event of an accident. Obstructing traffic on the autobahn is against the law — so running out of gas is not only dangerous, it can earn you a big ticket. In fast-driving Germany, the backed-up line caused by an insensitive slow driver is called an Autoschlange, or “car snake.” What’s the difference between a car snake and a real snake? According to locals, “On a real snake, the a– is in the back.” France: Most of the autoroutes in France have tolls (the exception is in Brittany). While the tolls are pricey, the alternative to these super “feeways” usually means being marooned in countryside traffic — especially near the Riviera. But paying the tolls can be tricky. At many tollbooths, American credit cards are not accepted unless they have a smart chip (what Europeans call “chip-and-PIN” cards). Use cash — it’s best to have smaller bills, since the automated machines won’t take 50-euro bills and often there aren’t any cashiers. At pay points, avoid booths showing only “Telepeage” or a credit-card icon. Look instead for green arrows above the tollbooth or icons showing bills, which indicate they accept cash. Road speeds are monitored regularly with speed cameras (a mere two kilometers over the limit gets a pricey ticket). The good news is that drivers are usually warned first. Look for a sign with a radar graphic that says, “Pour votre securite, controles automatiques.” Anyone caught driving over the limit will be fined a minimum of about $180.