"Consistent With a Weakening Growth Backdrop," And Other Euphemisms For "The Economy Is Contracting"

Via @gaypatriot, consumer spending is the weakest in six months.

Consumer spending stalled in May as stagnant wages and slackening employment held back the biggest part of the U.S. economy.

Purchases were little changed after a 0.1 percent rise the prior month that was smaller than initially reported, according to Commerce Department figures issued today in Washington. Another report showed household sentiment dropped this month to the lowest level of the year.

In some possibly good news, Europe says it's had a "breakthrough" on its finance crisis.

Before quoting it, I'll just mention the old truism that diplomats only announce success, because a diplomat defines "success" as "an agreement." They're not in the business of solutions, they're in the business of agreement.

And yes, this is a negotiation among sovereigns, so it is a diplomatic effort.

And they've struck an agreement.

But I don't see how any agreement changes the basic math: Most of Europe is spending more than it is willing to pay, backstopped by German wealth, and the Germans, for obvious reasons, don't want to continue subsidizing the rest of Europe.

But they have an "agreement."

Under the deal, European leaders agreed to create a single supervisory body to oversee the eurozone's banks which could use the single currency area's rescue funds, the European Financial Stability Facility or European Stability Mechanism, to aid banks directly without adding to governments' debt.

Without reading the details: This would mean Germany is funding an emergency stabilization fund, which is then used to recapitalized the failing, near-bankrupt banks of the PIIGs.

And that will tide them over... until the next time they need to borrow a few dozen billion on Germany's account.

posted by Ace at 12:48 PM

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