German decoupling is an illusion
By Sober Look
The concept of German decoupling from the Eurozone recession may have been wishful thinking. The latest German Manufacturing Purchasing Managers’ Index (PMI) has converged with that of the Eurozone as a whole. Manufacturing PMI is a closely watched index and tends to be a leading indicator for the GDP.
In response, Spain’s 5yr sovereign CDS hit a new record high of 511bp (previous high was 510 on 4/16). The Eurozone is headed for a double dip.
Editor’s note: This post first appeared on Sober Look’s website.
For more at Credit Writedowns predicting a double dip in the Euro Zone because of austerity, see January’s "Germany is in recession already with the rest of the euro zone". But also see October’s "Is Europe Sliding Into a Double-Dip Recession?" and March 2010’s "Spain’s debt woes and Germany’s intransigence lead to double dip", where it is all explained.
Anyone who thought that Germany could completely decouple from the mess that they have imposed on the rest of Europe is living is cloud cuckoo land. Germany will eventually reap the seeds of destruction that it has sown across Europe. Those seeds will ultimately lead to a German banking crisis and the end of the Euro.