Posted by AzBlueMeanie:
The Euro financial austerity crisis in the European Union has triggered the inevitable recession that I have been warning you about this year. It's only a question of how much of an impact it will have upon the U.S. economy.
The AP reports at the Washington Post, Eurozone back in recession as official figures show 0.1 percent contraction in Q3:
The 17-country eurozone has fallen back into recession for the first
time in three years as the fallout from the region’s financial crisis
was felt from Amsterdam to Athens.
And with surveys pointing to increasingly depressed conditions
across the 17-member group at a time of austerity and high unemployment,
the recession is forecast to deepen, and make the debt crisis — which
has been calmer of late — even more difficult to handle.
Official figures Thursday showed that the eurozone contracted by 0.1
percent in the July to September period from the quarter before as
economies including Germany and the Netherlands suffer from falling
The decline reported by Eurostat, the EU’s statistics
office, was in line with market expectations and follows on from the 0.2
percent fall recorded in the second quarter. As a result, the eurozone
is technically in recession, commonly defined as two straight quarters
of falling output.
The eurozone economy shrank at annual rate of
0.2 percent during the July-September quarter, according to calculations
by Capital Economics.
“The eurozone economy will continue its
decline in Q4 and probably well into 2013 too — a good backdrop for
another debt crisis,” said Michael Taylor, an economist at Lombard
* * *
The eurozone economy is worth around €9.5 trillion, or $12.1
trillion, which puts it on a par with the U.S.. The region, with its 332
million people, is the U.S.’s largest export customer, and any fall-off
in demand will hit order books.
While the U.S has managed to
bounce back from its own recession in 2008-09, albeit inconsistently,
and China continues to post strong growth, Europe’s economies have been
on a downward spiral — and there is little sign of any improvement in
the near-term. Last week, the European Union’s executive arm forecast
the eurozone’s economy would shrink 0.4 percent this year. Then only a
meager 0.1 percent growth in 2013.
* * *
[Even Germany] is now struggling as exports drain in light of the economic problems afflicting large chunks of the eurozone.
economy grew 0.2 percent in the third quarter, down from a 0.3 percent
increase in the previous quarter. Over the past year, Germany’s annual
growth rate has more than halved to 0.9 percent from 1.9 percent.
* * *
Perhaps the most dramatic decline among the eurozone’s members was
seen in the Netherlands, which has imposed strict austerity measures.
Its economy shrank 1.1 percent on the previous quarter.
Five eurozone countries are in recession — Greece, Spain,
Italy, Portugal and Cyprus. Those five are also at the center of
Europe’s debt crisis and are imposing austerity measures, such as cuts
to wages and pensions and increases to taxes, in an attempt to stay
As well as hitting workers’ incomes and living standards, these
measures have also led to a decline in economic output and a sharp
increase in unemployment.
Spain and Greece have unemployment rates of over 25 percent.
* * *
Protests across Europe on Wednesday highlighted the scale of
discontent and with economic surveys pointing to the downturn getting
worse, the voices of anger may well get louder still.
likelihood is that this anger will continue to grow unless European
leaders and policymakers start to act as if they have a clue as to how
to resolve the crisis starting to unravel before their eyes,” said
Michael Hewson, markets analyst at CMC Markets.
* * *
Mario Draghi, the ECB’s president has been widely credited for
helping foster the more optimistic tone in the markets but he admits
there’s still a long way to go.
“The year that is about to end
will be remembered not only for the effects the European sovereign debt
crisis has had on the euro and for the significant weakening of the
European economy, but also for the responses to these challenges by the
ECB, national governments and the European Union,” he said in a speech
at Univerisita Bocconi in Milan.
“Ultimately, it is up to
governments to dispel once and for all the persistent uncertainties that
markets perceive and citizens fear,” Draghi added.
The wider 27-nation EU, which includes non-euro countries, avoided the
same recession fate as the eurozone. Eurostat said the EU’s output rose
0.1 percent during the third quarter, largely on the back of an
Olympics-related boost in Britain.
The austerity crisis in Europe is leading to civil unrest and a drift towards radicalism in its political parties. Reuters reports at the Huffington Post, Europe Austerity Protests: Strikes Sweep Southern Europe In Response To Cuts:
Police and protesters clashed in Spain and Italy on Wednesday as
millions of workers went on strike across Europe to protest against
spending cuts they say have made the economic crisis worse.
Hundreds of flights were cancelled, car factories and ports were at a
standstill and trains barely ran in Spain and Portugal where unions
held their first coordinated general strike.
Spain, 81 people were arrested after scuffles at picket lines and
damage to storefronts. Riot police in Madrid fired rubber bullets at
In central Rome, students stoned police in a protest over money-saving plans for the school system. A few dozen protesters, hurling bottles and large firecrackers, clashed with riot police, who fired tear gas and dragged away at least one
bleeding protester into a police van, a Reuters witness said.
International rail services were disrupted by strikes in Belgium and workers in
Greece, Italy and France demonstrated as part of a "European Day of
Action and Solidarity."
It was the biggest Europe-wide challenge by organised labour to austerity policies that have aggravated recessions and mass unemployment in nearly three years
since the start of the euro zone's debt crisis. But it seemed unlikely
to force hard-pressed governments to change their cost-cutting
* * *
"Everybody has to do something to call attention to what's happening,"
said Esteban Quesada, 58, a hardware store owner in Barcelona who
closed his shop to join the protests in Spain's second city.
"Things have to change… Money has ended up with all the power and people none. How could this happen?"
Spain, Portugal and Greece have all slashed spending on pensions, public
sector wages, hospitals and schools. But frustration has mounted as the
cuts aggravate the economic downturn. In Spain, most of the savings
have been gobbled up to meet higher interest payments on the national
debt, swollen by the cost of rescuing banks after a real estate bubble
In Spain, a decade-long building boom collapsed, leaving airports,
highways and high-rise buildings disused around the country.
Germany's central bank, the Bundesbank, said in a report on Wednesday that the
euro zone debt crisis is still the number one risk to German banks and
insurers, and the situation had not improved from last year.
Pledges from the European Central Bank to support sovereign bond prices for
countries that seek aid have brought some relief to Spain and Italy in
the capital markets.
* * *
While several southern European countries have seen bursts of violence,
a coordinated and effective regional protest to the austerity has yet
to gain enough traction to significantly shift policy.
* * *
Passions were inflamed when a Spanish woman jumped to her death last
week as bailiffs tried to evict her from her home. Spaniards are
furious at banks being rescued with public cash while ordinary people
* * *
Italy's biggest union, CGIL, called for a work stoppage of several
hours across the country. The transport ministry expected trains and
ferries to stop for four hours. Students and teachers were set to
In Greece, which saw a big two-day strike last week as parliament voted to approve new cuts, hundreds of strikers rallied peacfully in central Athens, holding aloft giant Italian, Portuguese and Spanish flags and banners proclaiming "Enough is
In France, five trade unions organised marches in more than 100 cities but did not call for a strike.
Left-wing critics of Socialist President Francois Hollande said he has failed to
address the concerns of French workers who have the same fears as
their counterparts in southern Europe.
The American corporate "lamestream" media has done a terrible job of reporting on the Euro financial austerity crisis. You have to watch the foreign news programs on PBS or go to the BBC to get any good television reporting on Europe. For the American corporate "lamestream" media, the 10 seconds they take to report how the U.S. stock markets closed today is the only "economics" reporting they ever do. I miss the late Irving R. Levine. Thank God for the print media.
Why should you care about this austerity crisis? First, a recession in the European Union will inevitably affect the U.S. economy, it is only a question of how deeply.
Second, the so-called "fiscal cliff" debt crisis that the media is fixated on — because the Beltway media villagers are invested in selling you cuts to social security and Medicare benefits — is really a prescription for an austerity crisis of our own. It’s not a fiscal cliff—it’s an austerity crisis, and The fiscal cliff = the austerity crisis. The media villagers do not want you to make the connection between Europe's austerity crisis and the austerity the media villagers are trying to sell you here at home.
They fear the kind of protests we are seeing develope all across Europe to conservative economics austerity measures.