Decline of M3

Hasschu

I received a msg today with the following comment "M3 contracted 30 pc last month. A death sentence for a country with high indebtedness." This was attributed to an IMF spokesperson. I don't have time at the moment to do the proper verification.

Hasschu

An exact quote is "Ireland's M3 contracted at an annual rate of 30 pc last month, a death sentence for a hyper-indebted economy...." . Ambrose Evans-Pritchard of the Telegraph is on the edges there somewhere although the quote was attributed to the IMF. There is a lot of negative comment coming out of London particularly related to ECB and EU. At this stage I am inured to it.

Économiste Monétaire

June figures are released at the end of this month. M3 would have to fall by €65.267bn from the June figure last year for that to be true. I don't know why an IMF official would be privy to this information so early, anyway. Did the person(s) state which component of M3 changed so dramatically? Or, are they saying that the m-o-m figure changed at an annualised rate of 30%?

Flamed Diving

Any follow-up on this? Any proper sources?

Hasschu

http://www.nakedcapitalism.com/search?updated-max=2009-07-13T05%3A22%3A00-04%3A00&max-results=5

Article entitled A Grim Outlook for the Eurozone

Économiste Monétaire

I have no idea where that 30% figure is coming from, annualising the monthly change is just silly as that's at 40%. This is a graph of the annual growth rates in M2 and M3 for Ireland:

Hasschu

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5811343/Europe-digs-its-economic-grave-while-the-ECB-answers-to-no-one.html

Flamed Diving

Telegraph is out in force, on this thread.

Économiste Monétaire

Telegraph wrote:

Ignore M3 at your peril. It flashed awarning signal in the US months before the collapse of Lehman Brothers last September; it is flashing the similar warning signals in Europe now.

Strange, that U.S. M3 'flashed a warning signal', considering that the Fed stopped publishing M3 in March of 2006.

Telegraph wrote:

Ireland's M3 contracted at a 30pc annual rate last month, a death sentence for a hyper-indebted economy. The wreckage will be evident just in time for the Irish to vote again – under extreme duress – on the EU's Enabling Act in October. This should make for interesting political chemistry.

The annual change cited above is not true, as shown by my previous graph. If anyone wants to see this, check the CBFSAI monthly stats, table A3.2.

Flamed Diving

Tsk, EM.

Two years is 24 months, duh!




On a more serious note, the data you provided stops at May 2009. He is referring to June 2009, I think. Although it is highly unlikely that there has been that drastic a change in one month.

Économiste Monétaire

That's because the May figures are the latest ones publicly available. June figures are published at the end of this month. I very much doubt the Telegraph would have these already.

Économiste Monétaire

Well, that 30% drop didn't materialise.



Extra graph on mortgage lending for anyone interested.