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By HaleStewart August 29, 2014 8:08 am
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Problems Mount For The EU

     Today, two key economic EU indicators were released: unemployment and inflation.  Neither had any good news for the EU.

     Let's start with inflation, which printed at .3%.  The downward march to 0% continues:

This increases the risk the region is in the middle of a deflationary spiral.  EU investors have already bid rates down to record levels, indicating they believe the region is probably already in this state.

     And then there is unemployment, which today printed at 11.3%. 

The rate increased starting in mid-2011 and has continued to move higher since.  While the number appears to have topped, the implications are clear: the economy is in trouble.

     The euro market has already accepted that the ECB will have to start doing something drastic to devalue the euro as evidenced by the large drop in the euro/dollar over the last three months:

Expect more downward pressure with this news.

     The EU's experiment with austerity and lack of central bank action is clearly not working.  However, I'm not optimistic we'll see any major change in the overall policy stance.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer 

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