Euro Mess

Will the Europeans ever get their act together? In last Thursday’s FT, James Mackintosh observed in his column: “Every time Europe’s leaders are given a breathing space by the European Central bank, they return to their petty disputes and progress stops.” While they ceaselessly debate about how to keep their monetary union from disintegrating, the stress on the euro zone’s economy is worsening.

On Thursday, the ECB released data showing that monetary aggregates continued to grow in the euro area, with M2 up 3.2% y/y through August. However, M2 growth was negative in Spain (-7.3%, August ), Greece (-15.0%, July), Portugal (-6.2%, July), and Ireland (-3,5%. July). The ECB’s data also showed that lending by monetary financial institutions (MFIs, excluding central banks) to the private sector plunged by €766 billion (saar) over the past three months through August. That was mostly attributable to a big drop in loans by MFIs to other financial institutions. Now we know why ECB President Mario Draghi felt compelled in late July to promise to do whatever it takes to save the euro.

Today's Morning Briefing: Debates. (1) Lots of hot topics to get heated about. (2) Soon there will be some winners and losers. (3) Obama vs. Romney: The undecided vs. the decided. (4) Fiscal cliff no matter who wins? (5) Euro zone remains stressed. (6) China’s landing is looking harder. (7) Did Bibi call off “October Surprise” for Iran? (8) Time for a debate about a US recession again. (9) Benchmark revisions show more jobs. (10) The next great debate. (11) “End of Watch” (+). (More for subscribers.)