Plagued by seemingly perpetual debt problems due to large welfare states, the Euro-zone, the 17 countries that make up the European Union, has fallen into a recession for the second time since 2009:
The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday.
The French and German economies both managed 0.2 percent growth in the July-to-September period but their resilience could not save the 17-nation bloc from contraction as the likes of The Netherlands, Spain, Italy and Austria shrank.
Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2 percent drop in the second quarter.
Those two quarters of contraction put the euro zone’s 9.4 trillion euro ($12 trillion) economy back into recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.
A rebound in Europe is still far off. The debt crisis that began in Greece in late 2009 is still reverberating around the globe and holding back a lasting recovery.
Analysts said even the euro zone’s top two economies were likely to succumb in the final three months of the year.
It’s official: the New York Times’ resident Nobel Prize Laureate/Loony is delusional. He wrote on his blog Monday about “how right he was”:
We’re coming up on the second anniversary of my piece “Myths of Austerity“, in which I tried to knock down the simply insane conventional wisdom then gelling among Very Serious People. Intellectually it was, I think I can say without false modesty, a huge win; I (and those of like mind) have been right about everything.
But I had no success in deflecting the terrible wrong turn in policy. Moreover, as far as I can tell none of the people responsible for that wrong turn has paid any price, not even in reputation; they’re still regarded as Very Serious, treated with great deference. And the political tendency behind that terrible economic analysis has at least a 50% chance of triumphing in America.
“Oh well” is right.
His first problem is that he says he has “been right about everything.” When one looks at the stimulus programs that have been enacted since this recession began, and the high unemployment that has persisted, the evidence is blatantly clear: Krugman is an idiot.
His second problem is his statement that “I had no success in deflecting the terrible wrong turn in policy.” Um, lest I am living on a different worldline than Krugman, the man’s main policy prescription has been stimulus, and we’ve had a lot of it:
Moody’s Investor Service, one of the three major credit rating services, took a move last week that is sure to send some shockwaves across Europe. Moody’s lowered the United Kingdom’s credit rating due to the debt that will continue to weigh on the country:
Moody’s lowered the U.K.’s domestic and foreign-currency bond rating one notch to Aa1 and changed its outlook to stable. It is the first of the three major ratings firms to do so, though both Standard & Poor’s Ratings Services and Fitch Ratings have the U.K. on negative outlooks.
The move by Moody’s is a psychological blow to the United Kingdom, which is fiercely proud of its historical position on the world stage and keenly attuned to signs of its diminishment. It is also a political blow to Prime Minister David Cameron and his chancellor of the exchequer, George Osborne, who has long justified his painful government spending cuts on the grounds that he is maintaining the U.K.’s triple-A rating.
“We expect the country’s debt will continue to grow in coming years,” said Bart Oosterveld, managing director in charge of Moody’s sovereign ratings group, in an interview. “In our central scenario, we don’t expect the country’s debt burden to stabilize until 2016.”
Cameron had enacted a series of austerity measures, which were met with protests and derision from opponents, aimed at curtailing the United Kingdom’s sizable welfare state. Unfortunately, these measures weren’t enough to keep the country’s credit rating in tact.
Has a hurricane, tsunami, or flood hit Spain that I’m not aware of? If not then why is the Spanish Red Cross collecting money to help their fellow country man?
The Red Cross is out soliciting donations around Spain because people are beginning to starve. How can that happen in a first-world nation? Has there been a famine caused by drought, locust or some other biblical plague? No. There hasn’t been a famine in Europe since laissez-faire capitalism hit its shores.
Has there been a war that has disrupted the economy? No, Spain’s last real war was the Spanish Civil War back in the 1930′s.
Has there been a massive outbreak of disease forcing millions to be unable to not work? Well sort of. Its not a physical disease but rather a mental “disorder” that is causing massive physical effects for the people of Spain today.
The reason why so many people in Spain are needing ”assistance” is because of the ideology the majority of the Spanish have embraced over the decades. Spain and the other “PIIGS” — Portugal, Ireland, and Italy — are suffering the effects of what happens when Individuals embrace the ideas of collectivism and elect politicians who put those ideas into action.
I’m not saying that the bankers, politicians, and pundit apologists didn’t orchestrate this collapse. They were front and center. But when individuals forget they have a God-given right only to their own life, liberty and property they suffer the effects of the violation of the natural laws.
Right now the Red Cross in Spain is going around the country soliciting donations for those, according to Bloomberg Business, who “are hurt by the economy and government austerity measures.” But the article did not dig into why the economy is in shambles in the first place.
Paul Krugman may have picked a fight with the wrong country. Desparately trying to show that austerity doesn’t work, Krugman posted a graph showing stale GDP growth in Estonia, a tiny Eastern European country, during the worldwide recession. This caught the eye of Estonian President Toomas Hendrik Ilves, who blasted Krugman on over four separate tweets earlier this week:
Let’s write about something we know nothing about & be smug, overbearing & patronizing: after all, they’re just wogs: http://krugman.blogs.nytimes.com/2012/06/06/estonian-rhapsdoy/
Guess a Nobel in trade means you can pontificate on fiscal matters & declare my country a “wasteland”. Must be a Princeton vs Columbia thing [Ilves went to Columbia for undergrad.]
But yes, what do we know? We’re just dumb & silly East Europeans. Unenlightened. Someday we too will understand. Nostra culpa.
Let’s sh*t on East Europeans: their English is bad, won’t respond & actually do what they’ve agreed to & reelect govts that are responsible.
The problem with Krugman’s conclusion is that Estonia is actually one of the few Eurozone countries that is doing quite well; a point that Dan Mitchell, an economist at the Cato Institute, noted yesterday:
And good lessons at that. No, seriously. Sweden—the country that is usually held up as an example on the left—actually shows that cutting spending is the way to go. From Investors’ Business Daily:
Sweden has a reputation as the prototypical cradle-to-grave socialist European nation, and the political left has long yearned for America to be more like the Scandinavian nation.
But it’s looking through a smudged window. With little notice, Sweden has changed.
The turnaround has been driven in no small part by the election of Fredrik Reinfeldt as prime minister in 2006. He took office in October of that year and by January of 2007, tax-cutting had begun. The Reinfeldt government also cut welfare spending — a form of austerity — and began to deregulate the economy.
That doesn’t sound like the Sweden that American Democrats hold up as the standard.
But as Finance Minister Anders Borg told the Spectator, the Reinfeldt government was simply continuing the last 20 years of reform.
Far from hurting Sweden’s economy, the changes have improved it. And they’ll likely help to protect it from the 0.3% economic decline now forecast for the euro zone in 2012.
That’s right—Sweden, of all places, is cutting spending and shrinking government, and has so far kept itself out of the economic downturn (or day I say disaster?) that has befallen Europe.
Or, Why Your Worries About Double-Dipping or A “Second” Recession Are Utterly Preposterous And Make You Seem Completely Out Of Touch With Reality
While doing some reading over the weekend, I came across this blog entry by Brad Plumer over at the Washington Post’s Wonkblog (the one headed by Ezra Klein) about the Bush tax cuts expiring and how that will affect the economy:
To put this in perspective, the Federal Reserve expects the economy to grow at a roughly 2.9 percent pace in 2013. If Congress does nothing at the end of this year, much of that growth could be wiped out, and there’s a strong possibility that the United States could lurch back into recession. (Granted, a lot could depend on how the Fed reacts in this situation.)
That bolding is my own emphasis. And it really irritates me.
I know that the National Bureau of Economic Research, the official decider of recessions and other economic forecasts, declared the Great Recession to be officially over in 2009. I know there is an official, academic definition of recession: two consecutive quarters of negative GDP growth (otherwise known, in normal person English, as “GDP shrinking.”) I know this is what Brad is talking about when he says “lurch back into recession.”
At the G8 summit at Camp David this weekend, the leaders issued a statement calling for more growth (ie. more government spending) instead of austerity.
CAMP DAVID, Md. — Leaders of the world’s richest countries banded together on Saturday to press Germany to back more pro-growth policies to halt the deepening debt crisis in Europe, as President Obama for the first time gained widespread support for his argument that Europe, and the United States by extension, cannot afford Chancellor Angela Merkel’s one-size-fits-all approach emphasizing austerity.
Pointedly recognizing “that the right measures are not the same for each of us,” the leaders of the Group of 8 nations, at a meeting hosted by Mr. Obama at Camp David, committed to “take all necessary steps” to strengthen their economies. They said they wanted to keep Greece in the euro zone and vowed to work to promote growth in Europe, though behind the scenes distinct differences remained over what kinds of stimulus policies to pursue.
“Our imperative,” the leaders said in their statement, “is to promote growth and jobs.”