Retailers are sinking in the US

Something odd is going on in euroland.
Well, something strange is always going on over there as all nations and tribes have there own particularities and Europeans make it a point not to stop to surprise.

We observe that the ECB is building reserves. They are doing this already for some longer time, but last couple of weeks weeks the building process became steep.
How come?

Spontaneous I would suggest that it has to do with the aftermath of the financial crisis. A lot of money has to be invested in the States to absorb the expansion of the monetary basis. In buying dollars, Europe tries to keep his currency competitive in order to survive this depression. So selling euros seems to be a solution.

This is fine as long as the monetary base in Europe is not expanding too rapidly. If Europe is joining the States in the race to the bottom and start to participate in the game of expanding debt beyond imagination without being sure what can be the outcome, than this exercise makes no sense.
After all: twenty year of consumer debt accumulation must be unwound and this deleveraging process is not a pretty one to be part of. Elimination of 2 to 5 trln USD of household debt will result in something nobody can envision for the moment. We only see the beginning: retail figures are plunging and the actors are forced to leave the market. Yesterday it was Goody’s (ticker: GDYS) to go under. But as malls empty and the industry biggest lenders are tightening lending terms and try to reduce exposure, this bodes ill for the retailers.

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