MidnightWatcher – Prophecy in Motion

By Liam Halligan – “More than one in three international investors expect a global economic meltdown within the next 12 months, according to a new Bloomberg poll. Far more – almost 70pc – say the world economy is deteriorating, up from just 18pc four months ago.

At the heart of the gloom, of course, is the eurozone, with 90pc of those surveyed judging that the economy of the single currency area is getting worse. One wonders what planet the other 10pc are on.

The eurozone is clearly sliding. The European Commission’s economic sentiment indicator fell to 95 in September, from 98.4 the month before, plunging at a rate not seen since the Lehman Brothers collapse. German retail sales dropped faster in August than at any time since May 2007.

The eurozone – an economy second in size only to the US – is on the brink of a double-dip recession.

This grim prognosis, though, is set against a more hideous backdrop – the danger of a ‘euro-quake’. Greece will default. The only question is how the default is managed – indeed, if it is managed at all.

A bungled Greek payment failure will spark ‘contagion’, as spooked creditors pull the plug on some big eurozone government, leading to non-payment of wages and benefits, serious social unrest, and a single currency break-up.

We face the very real prospect of a major economic shock, the negative impact of which will be felt around the world.” Read more.

Germany ‘won’t give more to EU bail-out fund‘ – “German Finance Minister Wolfgang Schaeuble ruled out Germany contributing any more money to the beefed-up EU bail-out fund than the 211 billion euros approved by parliament, in an interview published Saturday. ‘The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished,’ he told the magazine Super-Illu. He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.” Read more.