Tuesday, November 29, 2011

Europe's M1, M2, M3 Are Shrinking: Implosion of Banks Moving To Europe's Core

Ambrose Evans-Pritchard from the Telegraph reports that Europe's money supply have begun to decline - in absolute terms. He is referring to M1, M2, M3.

M3 shrank last month by €59B to €9.78T, in "a sign that Europe's long-feared credit squeeze is underway as banks retrench to meet tougher capital requirements".

Quoting Tim Congdon from International Monetary Research: "This is very worrying,"  "What it shows is that the implosion of the banking system on the periphery is now outweighing any growth left in the core. We are seeing the destruction of money and it is a clear warning of serious trouble over the next six months."

Simon Ward from Henderson Global Investors said "narrow" M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

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