Worse than the 1930s: Europe’s recession is really a depression

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/20/worse-than-the-1930s-europes-recession-is-really-a-depression/

by adventured • 12 years ago

8 2 12 years ago

washingtonpost.com

PhantomGremlin• 12 years ago

That's not a pretty picture of the European economy.

I'm not an economist, so I may be totally wrong here. But I think the article omits a lot. For example, "creative destruction". Europe has committed to lifetime employment (yes I know that's not absolute). Which means that in a downturn companies can't easily cut overhead. Because they're carrying many superfluous people on payroll they have less money to invest in growing their business. And so GDP doesn't grow. And young people face 25% or 50% unemployment.

I'm not advocating simply firing people. I think there needs to be some sort of safety net. But even the USA, with very flexible labor laws and very accommodative monetary policy hasn't had much of a recovery from the Great Recession. So I'm not surprised that things are worse in the Euro countries.

BTW the article says "Europe" but I said "Euro" above. That's because the article doesn't make it clear, but I assume that places like the UK, Norway, Denmark, etc that don't use the Euro aren't as hostage to Draghi's ECB as the Euro countries are. But I'm not at all clear how that monetary policy stuff works there when multiple currencies are involved, so I could be completely wrong.

jaachan• 12 years ago

Summary:

  "It's a policy-induced disaster. ... eurocrats  .... the euro is standing between them and recovery ... Europe is stuck with a fixed exchange system that doesn't let them print, spend, or devalue their way out of a crisis"

There's no source or data for any of these claims, so you can skip the article. IMHO, it's just an anti-euro rant. Why wouldn't Europe be able to print money like the USA does? Article doesn't say.

Worse than the 1930s: Europe’s recession is really a depression

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