Cyprus deal .March 2013

I am surprised that most find the agreement positive .

The type of agreement reached leaves only one thing clear ; Cyprus will never be able to pay the assumed debt .

The island economy canot produce enough richness to pay back for the debt even if its citizens live on charity from now on .

The only way out of this if any , would be a generous agreement with Russia and that seems far away unless russians can grab most of the options on the gas assets of the island and Turkey does not seem to see that possibility without a certain degree of uneasiness .

Sooner or later unless the russian brother pays for it , Cyprus debt will have to be restructured and in the meantime UE investors and savers will be feeling very uneasy till the promised economy recovery becomes true for all european ailing economies and in that sense 2014 may be the year for a showdown between speculation and reality .


Published in: on marzo 25, 2013 at 12:20 pm  Comments (3)  

Spanish economy March 2013 . Two strategic readings on industrial costs and external trade .

The industrial costs show a shift upwards between Dec 2012 Jan 2013 .

The trade deficit also show a shift upwards taking it from € up to 3.458.000 € after a full year of reductions . As usual , data fed by media talks only about year on year figures which obviously ignores trend .

It confirms what Brahmason has been continuously pointing out regarding the limited export potencial of spanish companies .

The cost structure of a manufacturing company is shaped as a function of the type of investment and spanish companies are very sensitive to labor costs and raw material and energy and need therefore an environment of strong inflation of demand to produce significative earnings .

As the domestic demand collapses as a result of sustained inflation causing the inevitable bubble , companies resort to exports more as an obvious move of survival than because spontaneous vocation . The manufacturing sector has shifted activity to exports in the hope fed by official declarations that the crisis were to be overcome much sooner than reality tells and the result will be a strong deterioration of the EBIT as well as an increase of their ratio Debt / EBIT .


Published in: on marzo 25, 2013 at 11:54 am  Comments (1)