News one would have hoped not to get. Based on the latest information things are not looking at all "healthy" in Europe.....and even more troubling, the prospects for 2013 don't look much better either. Shaky times ahead for everyone, whether they live in Europe or not.
"It was a grim session for euro-watchers with a raft of disappointing news.
While the optimists on the eurozone economy would have been buoyed for a moment by the stronger than expected rise in German retail sales in September, the reality of a record high unemployment rate and the debacle of the Greek budget highlight the massive problems still confronting policy makers. At the same time, inflation in the eurozone remains low, which is not surprising given the ongoing domestic recession and global disinflation flowing from the weakness in commodity prices.
The low-light for the eurozone was the jump in the unemployment rate to a record high of 11.6 per cent or 18.5 million people. Within the eurozone, Spain has the highest unemployment rate at a mind-numbing 25.8 per cent while Austria has an unemployment rate of just 4.4 per cent. There is a growing consensus from market economists that the unemployment rate will reach 12 per cent early in 2013 despite the recent efforts from the European Central Bank to boost the economy with extremely easy monetary policy.
The failure of the eurozone to grow and the persistent economic gloom is being driven by fiscal austerity as most member countries work to lower budget deficits and in time, cut government debt. While the ECB is trying to pump up economic conditions, governments are cutting wages, services and hiking taxes.
This trade-off makes Professor Joe Stiglitz from Columbia University “very pessimistic” about the prospects of a recovery in the eurozone. Speaking on Bloomberg television overnight, Professor Stiglitz said, “basically Europe has put in place austerity packages that almost inevitably will lead the economy to become weaker, they haven’t put in place anything that will promote economic growth.” He added, “it’s difficult to see what the impetus for real growth in Europe will be.”
"It was a grim session for euro-watchers with a raft of disappointing news.
While the optimists on the eurozone economy would have been buoyed for a moment by the stronger than expected rise in German retail sales in September, the reality of a record high unemployment rate and the debacle of the Greek budget highlight the massive problems still confronting policy makers. At the same time, inflation in the eurozone remains low, which is not surprising given the ongoing domestic recession and global disinflation flowing from the weakness in commodity prices.
The low-light for the eurozone was the jump in the unemployment rate to a record high of 11.6 per cent or 18.5 million people. Within the eurozone, Spain has the highest unemployment rate at a mind-numbing 25.8 per cent while Austria has an unemployment rate of just 4.4 per cent. There is a growing consensus from market economists that the unemployment rate will reach 12 per cent early in 2013 despite the recent efforts from the European Central Bank to boost the economy with extremely easy monetary policy.
The failure of the eurozone to grow and the persistent economic gloom is being driven by fiscal austerity as most member countries work to lower budget deficits and in time, cut government debt. While the ECB is trying to pump up economic conditions, governments are cutting wages, services and hiking taxes.
This trade-off makes Professor Joe Stiglitz from Columbia University “very pessimistic” about the prospects of a recovery in the eurozone. Speaking on Bloomberg television overnight, Professor Stiglitz said, “basically Europe has put in place austerity packages that almost inevitably will lead the economy to become weaker, they haven’t put in place anything that will promote economic growth.” He added, “it’s difficult to see what the impetus for real growth in Europe will be.”
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