Eurozone crisis: hopes of recovery recede while recession looms

From The Guardian UK:

Gerard Lyons, the chief economist at Standard Chartered predicts that the eurozone will contract by 1.5% next year, while the UK will suffer a fall in output of 1.3%

Posted by: economics editor
Sunday 11 December 2011

A year ago, it was assumed 2011 would see life return to normal. Europe would sort out its little local difficulties, China and India would power along, and Barack Obama would use a resurgent US economy as the springboard for his re-election campaign.

One indication of how much things have changed is that back then, there was speculation on the timing of the first increases in interest rates in the UK and the US to fend off rising inflationary pressures. Many in the City thought that May was the likeliest month for the Bank of England to act. Wiser heads said May 2013, and today even that looks a touch on the hasty side.

Instead, 2011 ends with the euro fighting for its life, Britain weighing up what life might be like outside the EU, China fending off a hard landing, America in political gridlock and unemployment globally above 200 million and rising. Apart from that, everything’s going swimmingly.

For those who like their humour black, there are some ironies to be savoured. British governments for the past three decades have had an aversion to the idea of picking winners, with the one exception of the City of London. That “winner” proved to be the biggest loser of the lot, yet David Cameron decided that defending the interests of this tarnished special interest group should be Britain’s priority at last week’s summit.

The real reason for objecting to the creation of the Herbert Hoover Appreciation Society (or fiscal stability pact) created by Angela Merkel and Nicolas Sarkozy is that it condemns Europe to permanent deflation and high unemployment, so the prime minister may well have made the right decision for the wrong reasons.

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4 Responses to “Eurozone crisis: hopes of recovery recede while recession looms”

  1. Andrea B. Says:

    Good to see the Guardian on the same hymm sheet as Fox News. At least now they are showing there true colours.

    There was a prediction the Euro would be gone in ten days. I transferred money in euro this morning. No problems at all. Seems the Euro is still there.

    I had a very interesting discussion with my friends from various parts of Europe and further afield about the situation yesterday, after our meeting. A women from Argentina said she hopes the euro survives just to kick the Americans in the teeth to agreement from a woman from Chile. Both lost family to US torturers when neoliberalism destroyed there countries. The Thai couple made it clear that USA bankers destroy jobs, families, countries and everything they touch, as she lost her house during the Asia banking crisis. The Polish couple made clear that when the USA bankers such as Jeffrey Sachs came to there country, they caused massive hardships and thought it was a good thing. Apparently the Polish couple wrote to the Polish president asking for Jeffrey Sachs to be tried and executed. Most Bolivians and Russians just want Sachs executed, prefereably in Wall Street.

    The neoliberals have bet against the Euro constantly and have lost constantly. At the planning for building some large sci-fi models yesterday, one of my German friends summed the whole situation regarding the Euro up nicely, by stating the neo liberals are attacking what they think is a sailing boat, when in fact it is a Battleship Yamato that is about to come out of the fog at them.

    But anyway, the Euro is still here, contrary to what RTnews, Fox News, Wall Street, Bankers and financiers want.

  2. tinagrrl Says:

    “There was a prediction the Euro would be gone in ten days. I transferred money in euro this morning. No problems at all. Seems the Euro is still there.”

    Gee — did I say the Euro was “gone in ten days”? Did I say the Euro is gone in a month, two months, six months?

    What I have said is that Europe (as a whole) is in trouble. As a result, the entire world economy is in trouble.

    Well Andrea, I guess it’s all the fault of the USA — China isn’t experiencing a slow down (according to you), the USA is totally corrupt, there is not an upsurge of right wing, nativist, political parties in various parts of Europe, Ireland is doing great, the USA is all done — and you just can’t wait to see it happen.

    Is that why you seem to think we are rooting against the EU? Is it just a bit of projection on your part? Is it that hard for you to realize we are rooting FOR the EU?

    In any case — let’s agree to disagree on what the prudent course of action is. Let’s see what happens.

    By the way, do you think installing a “technocrat” to run Italy, someone vetted by the banks, and agreeable to France and Germany, is a democratic course of action?

    Just wondering.

    By the way, the “austerity diet” that seems all the rage in Europe is EXACTLY what FOX NEWS wants here in the USA.

    That, and both Latvia and Romania are “success stories” — right?

  3. Andrea B. Says:

    In Europe, the EU summit was about getting countries to live within there means. The UK clearly refuses to live within its means as it is bank controlled and run purely for the benefit of the banking sector. The EU setting down a new rule that EU countries should not go 0.5% of GDP out of budget every year with penalties if they go 3% out of budget any year. The EU is also working on banking regulation and a financial transaction tax.

    That is not austerity USA style, that is about fiscal responsibility. That is how to avoid a financial crisis such as the one we are in the middle of right now. A financial transction tax does tax the banks, slightly. That is the core of what the present EU summit was about.

    I do not understand why you or anyone else for that matter would oppose a country living within its means without loans from people like Goldman Sachs or your opposition to a financial transaction tax.

    In the USA, austerity appears to mean borrow even more money, reduce taxes on the rich, tax the poor, hate the poor, hate women, hate children and invade someone. That is no way to run a country.

    As for the ten days with the Euro thing. That Goldman Sachs-Neoliberal Tea Party bullshit has been posted on this blog. It was 100% wrong.

    Also the world economy is not composed of only USA, UK, Greece, Ireland, Portugal, Spain and Italy. A lot of countries are actually doing quite well, although the bankers based in Wall Street and the City of London are doing there best to create mayhem everywhere else as well.

    You need to stop looking for everything that is negative. I do not see you naming each USA state that is in recession. In Europe, Estonia, Finland, Sweden, Norway, Poland, Czech Republic, Serbia, Germany, Netherlands, Austria, Slovakia, Montenegro, Croatia, Slovenia, Denmark, Switzerland and Luxzemburg are all in positive growth.

    • Suzan Says:

      The EU like NAFTA, CAFTA, GATT,WTO etc is fundamentally dictatorial and anti-democratic. It removes people’s power to control the actions of the corporations and replaces governments with non-elected NGO made up of corporate selected oligarchs. Fuck all these Free Trade schemes. Fuck Free Trade. I want socialism and economic nationalism where democracies are able to protect themselves from the rapacious interests of the corporations.

      All these trade agreements have rendered democracy into a futile exercise in selecting which puppet selected by the corporate overlord we get to pretend governs us.

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