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.
Economic problems in Europe, which is experiencing record high unemployment in addition to sovereign debt crises, have caused a lot of concern in markets across the globe. And while our own economic growth in the United States has been less than pleasing, we haven’t felt the brunt of the Europe’s problems — though they are certainly offering a preview of what we can expect.
But there have been concerns that the United States may be slowly slipping into another recession, no doubt made worse by a dismal manufacturing report released yesterday:
The ISM manufacturing index for June came in at 49.7, lower than expected and signaling manufacturing activity has fallen back into contraction territory. That won’t help stocks much.
New orders crashed last month, falling to 47.8 from 60.1, and that’s probably a large part of why the index contracted, given that other measures looked better. As factory activity is often a leading indicator of overall economic momentum, this report is not a good sign for the outlook.
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: