The EZ is now the greatest economic laggard in the world and one reason is its paralyzed banking system. The austerity measures had and will not have the desired effect to get Club Med countries back on track and compatible.
Furthermore, the Eurozone periphery nations continue to struggle with what amounts to a paralyzed banking system with limited credit expansion capabilities. One key reason for this paralysis is a large (and growing) book of non-performing loans held by these nations’ banks (unemployed borrowers and broke housing developers tend to have trouble making payments on their loans).
H/T Sober Look
And not to forget that unlike the USA Europe’s banks have not been recapitalized.
We hear that Italy can refinance itself quite favorably and Spain’s exports keep growing but Italy contracted:
Italy’s economy contracted more than expected in the first quarter of 2013, shrinking 0.5% from the previous three months as activity fell in all sectors except farming, national statistics institute Istat said Wednesday.
Gross domestic product in the euro zone’s third-largest economy has now contracted for seven consecutive quarters, the longest recession since Istat began compiling comparable data in 1990.
France has entered its second recession in four years after the economy shrank by 0.2% in the first quarter of the year, official figures show.
Despite all this, the Germans seem to be living in cuckoo’s land and on another planet and are the most upbeat about the Eurozone.
H/T The Monkey Cage
It comes at a prize though and a remarkable correlation between being the ‘most trustworthy’ and the ‘most arrogant’ folks around, well, and the ‘least compassionate’ comes as no surprise.
Full Phew report here.
If you as a German keep splurging on more financial Kool-Aid, McKinsey has very bright news for you till 2025.
Consulting firm McKinsey, in an exclusive study for Manager Magazin, predicted 2.1% annual economic growth until 2025, a period the report called the “Golden Twenties.” Germany would rack up 80% more exports and create millions of jobs. “The Federal Republic stands before a second Economic Miracle,” Manager Magazin summarized it, the first one having been the multi-decade rise from the ashes after World War II.
More here about
Back to reality and the depression. All this was not quite envisioned when the whole EZ project was started, rather
An economically ascendant and politically isolated Germany was precisely what the euro was meant to prevent. Instead, George Soros says the “euro is in the process of destroying the European Union.”
it says on Felix Salmon’s blog.
Keep being glued to the screen and enjoy a rising DAX and just do not feel strange when you see 23-old suddenly driving around in 3-Series beamers. You know where that ended, don’t you.