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Ear to the Ground

Europe on the Downslide

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Posted on May 4, 2009
almunia
AP photo / Yves Logghe

EU Economic and Monetary Affairs Commissioner Joaquin Almunia delivers his gloomy forecast on Monday.

Well, it’s official: The European economy is in gloomier territory than previously believed. EU Economic and Monetary Affairs Commissioner Joaquin Almunia announced Monday that member economies will shrink by 4% this year, likely taking a further plunge of 0.1% in 2010.

Meanwhile, unemployment is expected to jump to 10.9% in 2010, with some countries hit harder than others: Germany, Ireland and Latvia, good luck y’all!

BBC:

“The European economy is in the midst of its deepest and most widespread recession in the post-war era,” said E.U. Economic and Monetary Affairs Commissioner, Joaquin Almunia.

“But the ambitious measures taken by governments and central banks in these exceptional circumstances are expected to put a floor under the fall in economic activity this year and enable a recovery next year.”

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By KDelphi, May 5, 2009 at 10:09 am Link to this comment

You are precisely correct, again, Ed.

The articles that “free mkt economists” wrote about the “newly most free” countries, are laughable now..or is it cryable.

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Ed Harges's avatar

By Ed Harges, May 5, 2009 at 6:11 am Link to this comment

Europe’s biggest mistake was that it allowed itself to become too Americanized — that is, it bought into all the wonderful “financial innovations” from the US.

These flimsy financial contraptions, laughingly known as “securities” (you know, as in “sure things”), are particularly dangerous investments for countries whose currencies are not the world reserve currency — that is, not the US dollar. In the US, our debts are in dollars, and we can pay them in our own currency. If the value of the dollar falls, our existing debt load does not rise, since our debts are in dollars. But in Iceland, for example, they ran up huge debts that had to be paid in dollars or other foreign currencies, and then their own currency collapsed relative to these other currencies. This vastly increased the effective debt load, something from which Americans are largely (so far) immune.

So gee whiz — why do they hate us? Can anybody still be wondering?

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By KDelphi, May 4, 2009 at 1:05 pm Link to this comment

Here is what The Heritage Foundation had to say abou Ireland in June, 2006: (ah…“free mt” economies)http://www.heritage.org/Research/WorldwideFreedom/bg1945.cfm

“...Ireland achieved this success through a combination of sensible policies and pragmatism. At the heart of these policies was a belief in economic openness to global markets, low tax rates, and invest­ment in education. While eco­nomic success over the past 15 years can be ascribed to a range of domestic and international fac­tors, it was not a fluke. Ireland has long had, and intends to sustain, low tax rates to attract investment. Its current 12.5 percent corporate tax rate evolved from the zero rate on export sales in the 1950s and the 10 percent rate on manufac­turing and some internationally traded services introduced in 1980.

Ireland’s transformation was national in scope, with individu­als, businesses, institutions, and government sharing the same ambition. It involved parents deciding that their children would have choices that they did not have and would not be forced to leave their home com­munities because of economic necessity. Political decisions were driven and sustained by the public will for success. There were some deviations from sensible policies at times, but through the many difficult years, the threads of consistent develop­ment can be seen. This paper explains how the transformation occurred.”

wow…it is very sad..

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By skulz fontaine, May 4, 2009 at 12:11 pm Link to this comment

Is this the “new Europe” or the “old Europe?” Sliding into the economic doldrums. How sad. Welcome to the ghetto.

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