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Bas
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Joined: Mar 26, 2005
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 Posted: Thu Aug 14, 2008 12:41 pm Post subject: European Economy Contracting |
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this has me surprised today:
| Quote: | The 15 economies of the eurozone contracted by 0.2% between April and June, heightening fears that the euro area is sliding towards recession.
The eurozone's first decline since it was created in 1999 was driven by a slowdown in exports and consumer spending.
The German economy, Europe's largest, shrank by 0.5% in the second quarter compared with the previous quarter.
And in both France and Italy GDP shrank by 0.3% in the second quarter.
The slowdown was less pronounced in the wider European community of 27 nations including the UK, which contracted by 0.1%.
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Read more here/BBC news
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Twilight
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| Posted: Thu Aug 14, 2008 12:54 pm Post subject: Re: European Economy Contracting |
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It did not surprise me too much. The US can game the stats at home, but it cannot game them abroad. And we have been having a credit spending boom of our own. That is going to come to an end sometime.
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Bas
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| Posted: Thu Aug 14, 2008 1:00 pm Post subject: Re: European Economy Contracting |
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| Twilight wrote: | | It did not surprise me too much. The US can game the stats at home, but it cannot game them abroad. And we have been having a credit spending boom of our own. That is going to come to an end sometime. |
Well, unless I've missed something, until now there weren't any big predictions of Europe going into recession and all of a sudden it's all but a certainty. But I guess you're right and I was fooled by the rigged numbers coming from across the atlantic, thinking that Europe would only sink after the US did, which it didn't.....officially.
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Twilight
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| Posted: Thu Aug 14, 2008 1:12 pm Post subject: Re: European Economy Contracting |
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Recession has been the word on everyone's lips in the UK since spring. At least, those who utter it. The media has been known to refer to it as "the r-word" in that irritating mock coy style of theirs. But there has been a debate in the UK for a few months about whether we are sliding into a recession. It has a "when not if" quality to it. Interestingly we are still showing positive growth, but with so many warnings pouring out, I had little confidence the situation in mainland Europe was any better. Indeed it is not. Especially as the strong Euro was supposed to have been nailing the manufacturers all year - looks like it has been. You are right though, I do not remember seeing a whole Eurozone recession forecast, but when I saw the headline it was not unexpected.
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Fishman
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Joined: Aug 11, 2005
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| Posted: Thu Aug 14, 2008 1:24 pm Post subject: Re: European Economy Contracting |
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| Doesn't surprise me a bit. Thought the US is having major problems, the economy and work force is much more flexible than Europe. Companies like the Italian airline have little to no ability to adapt to a changing situation. US airlines though in deep trouble are far more flexible in their response to increased fuel changes. This runs across the economic board. |
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Bas
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| Posted: Thu Aug 14, 2008 1:52 pm Post subject: Re: European Economy Contracting |
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| Fishman wrote: | | Doesn't surprise me a bit. Thought the US is having major problems, the economy and work force is much more flexible than Europe. |
Or so goes the cliche. And ofcourse it has some truth to it (but less so than in the 80's), but not necesarily in this stage of the economic cycle. I think this is more a result of expensive European products and relatively expensive credit. Either way, I think it would be better for Europe to inflate it's way out of the problem (but the ECB doesn't have that mandate) like the US instead of going into recession(=restructuring the economy) or maybe not. Come to think of it, recession might actually be better thinking about what might be lying ahead in the coming decades which will be all about making painful changes.
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dorlomin
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Joined: Aug 05, 2007
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| Posted: Thu Aug 14, 2008 2:45 pm Post subject: Re: European Economy Contracting |
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| The weakness of the dollar must surely have had a big impact on German exports as US machine tools and other manufactured goods would have become significantly cheaper in a short space of time. |
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FoxV
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Joined: Mar 02, 2005
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| Posted: Thu Aug 14, 2008 3:01 pm Post subject: Re: European Economy Contracting |
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| Fishman wrote: | | Doesn't surprise me a bit. Thought the US is having major problems, the economy and work force is much more flexible than Europe. |
The US also has Hegemony on its side which allows it to spew bogus statistics on the world and they lap it up like starving dogs (sorry for the imagery, I'm feeling a bit hostile today)
According to Shadowstats, the US has been in a recession pretty much since the Dot com bust.
What this does mean is rate cuts all around. Ben is running out of "legitimate" bullets to pump money into the system. It needs the UK and Euroland to drop rates to give it cover for another cut.
Fed rate is going to at least 1% if not 0% after all is said and done. Just like after the dot com collapse, rates dropped to 1.75% and then dropped 0.25% every 6 months. The reason Greenspan didn't go straight to 1% is that they need the European's to dump their rates to prevent a dollar collapse
Spot the difference
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