EuroZone jobless rate hits new high

posted at 11:21 am on June 1, 2012 by Ed Morrissey

It’s not just the US, which is a point that Barack Obama will likely seize in the same manner a drowning man clings (bitterly?) to a life preserver in a storm-tossed ocean.  The EuroZone hit a 17-year high unemployment rate this spring at 11%, and the rate in the larger European Union rose to 10.3%:

The jobless rate in the 17-nation euro zone reached 11 percent in March and April, the highest since the start of the data in 1995, Eurostat, the European statistical agency said in Luxembourg. The previous record had been 10.9 percent in February, Eurostat said, after it revised March’s figure upward from the 10.9 percent initially estimated.

“We have an economy that’s freezing up, it’s clearly not creating jobs,” Peter Dixon, global equities economist at Commerzbank in London, said. “But right now policy makers’ main concern is to ensure that the peripheral countries’ governments and banks can stay afloat. Given that, the real economic data is taking a back seat.”

But before long, he said, unemployment “is going to be a major problem for those countries,” as it rises to the top of the political agenda and further complicates the financial problems.

For the overall European Union, made up of 27 nations, the jobless rate was 10.3 percent in April, up from 10.2 percent in March. Spain’s jobless rate, of 24.3 percent, was again the highest in the European Union, while Austria’s, at 3.9 percent, was the lowest.

On one hand, Obama can rightly claim that some of the economic problems in the US are linked to Europe’s own economic issues, especially the debt and currency crises that have roiled the Continent for the last few years.  Of course, the Obama administration can’t claim to have been surprised by those problems, and may have trouble explaining any of their actions as a bulwark against European turbulence.  Given the nature of global commerce, though, the US government has only limited options for building firewalls against a contagion in the free markets.

Among those options, though, would be to streamline regulation, reduce government deficit spending to allow for more private lending, and reforming the tax system to provide more long-term clarity.  The Obama administration has done none of these, and in most cases worked in the opposite direction.  The same is true for the EuroZone, which now wants to go on another stimulus bender rather than take the hit and reduce government spending before the whole debt edifice collapses altogether.  Europe and the US have similar problems because we have followed similar policies, even and especially over the last few years when the debt crisis became impossible to ignore.

Massive stimulus spending and rapid increases in regulatory regimes do not produce a stable job-creation environment, which we have now seen in both hemispheres.  It’s time to try something new … like responsible stewardship of the public sector and greater stability in taxes and regulations for the private sector.

In Europe, they see the acute problem as a lack of central authority to do anything:

U.S. and European officials, who just weeks ago seemed to be getting a handle on the euro zone’s financial crisis, are now scrambling to prevent a new round of problems from pulling down some of Europe’s largest economies.

European Central Bank President Mario Draghi warned in Brussels on Thursday that he considered the euro zone’s current structure “unsustainable,” and said the region’s governments must surrender far more budget and regulatory power to a central authority if the currency union is to be saved. …

In recent weeks, European officials, the International Monetary Fund and others have urged that an existing European bailout fund be used to pump money directly into Spanish banks. At the moment, the Spanish government would have to borrow money to bail out the banks, and this would increase its own debt, aggravating concerns about Spain’s financial health.

German officials are opposed to providing the bailout fund with the flexibility to help banks directly.

In Brussels on Thursday, Mario Monti, Italy’s prime minister, said Germany was putting the goal of a more integrated Europe at risk by its “lack of promptness” in accepting the change.

Draghi, a critical voice in the discussion as head of the central bank used by the 17 nations, said Europe needed to do more to back its banking system. At the same time, he criticized the slow response of Spanish officials in dealing with their banking crisis.

As I wrote earlier this week, that’s always been the central problem with the EuroZone and its shared currency.  Either Europe needs to integrate into one sovereign nation so that Greece and Spain can’t game the system without Germans having some say in those policies, or the separate nations need to return to separate currencies.  The political/debt crises are the inevitable outcome of shared currencies with separate economic approaches.


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Hmmm…wonder how they keep score. Do they count those who have given up and are no longer in the workforce? If so, our unemployment rate is higher than theirs!

Christian Conservative on June 1, 2012 at 11:25 AM

first. for once

gerrym51 on June 1, 2012 at 11:26 AM

France is becoming like the US.

They voted in a Socialist as Prez…

Working great here…
/

Electrongod on June 1, 2012 at 11:28 AM

No problem! Communism will fix that!

More proof that capitalism is a failure!

/s ….. just trying to head the trolls off at the pass.

Oh, and NOROMNEYNOBAMA 2012!!!!!

UltimateBob on June 1, 2012 at 11:30 AM

I don’t see blaming Europe as being an effective reelection strategery. Besides, I thought the left wanted us to be more like Europe.

Doughboy on June 1, 2012 at 11:30 AM

Europeans: “Obama Economy is Killing Us”!

Rovin on June 1, 2012 at 11:30 AM

In Europe, they see the acute problem as a lack of central authority to do anything:

Yes because central planning ALWAYS…erm, FAILS?

Never mind. The EU bureaucrats will demand their USSEU anyway. This is a crisis they don’t want to let go to waste.

CorporatePiggy on June 1, 2012 at 11:30 AM

As I wrote earlier this week, that’s always been the central problem with the EuroZone and its shared currency. Either Europe needs to integrate into one sovereign nation so that Greece and Spain can’t game the system

I agree with you, but how likely is that to happen? Companies in Asia are also laying off. Several recent reports specifically discuss cool downs in Chinese and Japanese manufacturing.

India is also dealing with difficult economic conditions.

Our situation is made worse by the dimcrat Senate who will not reduce our corporate take rate and prevent Taxmageddon. For reason that make no sense whatsoever they have decided that wrecking the country is a good tactical move for them.

That plan is not working for them.

dogsoldier on June 1, 2012 at 11:30 AM

Europe is getting bad very quickly. We’re beginning to see bank runs on Spanish financial institutions. I think at this point even all Spanish banks were to be recapitalized by the ECB/US Federal Reserve, it would be too late to halt the panic – the general publics of the nations of Europe no longer believes the lies the various EU governments are telling them.

We’re hearing stories from Zero Hedge now about Greece is facing the complete loss of electric power: http://www.zerohedge.com/news/greece-faces-electric-meltdown

Additionally, the Euro has been falling about a cent a day. The only reason it didn’t slump further today is the horrible US jobs numbers and fresh QE3 anticipation, which caused some temporary relief for the Euro.

Doomberg on June 1, 2012 at 11:30 AM

Spain will be begging for a bailout from the ECB within two weeks.

steebo77 on June 1, 2012 at 11:31 AM

reduce government deficit spending to allow for more private lending

This is a red herring. There are vast quantities of private dollars just waiting to pour into the economy irrespective of government deficit spending. Which is not to say that such ridiculously high spending is a good thing as clearly it is not. Just that it is not limiting private spending at this time.

edshepp on June 1, 2012 at 11:32 AM

German and Swiss 2-year notes are now paying negative-to-zero yields. Incredible.

steebo77 on June 1, 2012 at 11:34 AM

The euro has to fade away. The real world will not bend to the socialist’s mind of utopia.

Root Problem: Greece’s retirement age 50. Germany’s retirement age 66.

jukin3 on June 1, 2012 at 11:35 AM

JugEars:EuroFORWARD!!!

KOOLAID2 on June 1, 2012 at 11:35 AM

The drowning comparison can be carried on to how this situation should be handled:

In life-saving classes, we were always told that if a drowning person fights with the rescuer, let him drown. It’s easier to try and revive someone once you get to the beach than to be drowned yourself by someone who has panicked.

These nations, just like the US has now, flirted with or totally embraced socialism and are suffering the consequences. Either they abandon the moronic notion that socialism works, or they drown for later rebuilding.

At this time, the USA is in a very constricted position for helping anyone. If Obama gets re-elected, we’re done.

AubieJon on June 1, 2012 at 11:36 AM

Root Problem: Greece’s retirement age 50. Germany’s retirement age 66.

jukin3 on June 1, 2012 at 11:35 AM

…JugEar’s retirement age…50.

KOOLAID2 on June 1, 2012 at 11:37 AM

European Central Bank President Mario Draghi warned in Brussels on Thursday that he considered the euro zone’s current structure “unsustainable,” and said the region’s governments must surrender far more budget and regulatory power to a central authority if the currency union is to be saved. …

A “central authority” chosen by whom? Unelected bureaucrats and Eurocrats? Will they be German or French or Spanish or Greek?

This has been one of the major problems with the European Union since the early 1990′s–most of the legislative power is concentrated in the European Council, composed of people APPOINTED by heads of state of member countries, while the European Parliament only has veto power over what the Council decides, with no debating or lawmaking power of its own.

A group of democracies have surrendered their sovereignty to join an oligarchy, and the currency crisis is the perfect excuse for a massive power grab by the oligarchs.

Either Europe needs to integrate into one sovereign nation so that Greece and Spain can’t game the system without Germans having some say in those policies, or the separate nations need to return to separate currencies.

The latter solution would be the best thing to happen to all Europeans in the last 20 years.

Steve Z on June 1, 2012 at 11:37 AM

‘Sir, Does this mean that Ann Margret’s NOT coming?’

Seriously though… are you saying Socialism DOESN’T work?
.
.
.

Does this even need a /s/ tag?

a5minmajor on June 1, 2012 at 11:38 AM

There are vast quantities of private dollars just waiting to pour into the economy irrespective of government deficit spending. Which is not to say that such ridiculously high spending is a good thing as clearly it is not. Just that it is not limiting private spending at this time.

edshepp on June 1, 2012 at 11:32 AM

Not sure I follow you … So your argument is that there are vast quantities of private dollars which are not being spent, but it’s not the government deficit spending that is keeping those private dollars from being spent?

If that’s the case, then what is it that’s keeping all those private dollars waiting?

Lost in Jersey on June 1, 2012 at 11:39 AM

There are vast quantities of private dollars just waiting to pour into the economy irrespective of government deficit spending. edshepp on June 1, 2012 at 11:32 AM

And as long as there is a threat of higher taxes on capital investments, and completely unpredictable employee heath care cost, those private dollars will remain on the sidelines.

Rovin on June 1, 2012 at 11:40 AM

A Reuters piece is advocating for more Fed monetary policy easing. Because as we’ve all seen, borrowing and printing money is the true path to prosperity.

BKeyser on June 1, 2012 at 11:40 AM

heath = health

Rovin on June 1, 2012 at 11:43 AM

Great. Now Obambi has a new target to aim for. He won’t be happy until he matches European jobless rates.

RoadRunner on June 1, 2012 at 11:43 AM

Big collapse or piecemeal collapse?

forest on June 1, 2012 at 11:44 AM

I fully expect to see some current and former European government functionaries being tarred and feathered..literally. And for the most part deservedly so. They are the ones who made the promises that can’t be kept, but did manage to keep them in office.

BobMbx on June 1, 2012 at 11:47 AM

On one hand, Obama can rightly claim that some of the economic problems in the US are linked to Europe’s own economic issues, especially the debt and currency crises that have roiled the Continent for the last few years.

But if Obama had stimulated the U.S. economy with tax cuts and market-based deregulation instead of massive debt, energy shortages, and dismantling the health-care industry, European corporations would now be re-locating to the United States and hiring Americans.

There might have been a European crisis regardless of what America did. But with smart government, America could have been the last solid bastion of economic strength, to which the rest of the world would flock. As it is, we are one more sinking ship in an ocean full of them.

Steve Z on June 1, 2012 at 11:47 AM

“On one hand, Obama can rightly claim that some of the economic problems in the US are linked to Europe’s own economic issues, especially the debt and currency crises that have roiled the Continent for the last few years.”

Well, sure. Europe’s economic issues link everyone. Even Canada is affected and will be affected more by Europe’s mess when the collapse comes, but that hasn’t stopped Canada from doing well now.

Barry racked up $5T in debt in three years, the exact problem that is dragging Europe under. Quit blaming Europe for 1% of the Obama problem.

Dusty on June 1, 2012 at 11:49 AM

It’s Bush’s Europe’s fault…

PatriotRider on June 1, 2012 at 11:49 AM

Either Europe needs to integrate into one sovereign nation so that Greece and Spain can’t game the system without Germans having some say in those policies, or the separate nations need to return to separate currencies.

This would require extensive study to ascertain the effect this would have on soccer (or as known in socialist, “football”.). As long as there was no adverse impact on soccer, I would guess your average European wouldn’t mind.

MessesWithTexas on June 1, 2012 at 11:54 AM

Where’s bayam to explain to us how much better Europe is doing than the US – as she stated on the unemployment thread?

dentarthurdent on June 1, 2012 at 11:54 AM

And the Europe hating right wing rejoices…

uppereastside

/

PatriotRider on June 1, 2012 at 11:55 AM

We have GOT to keep W out of Washington!

Happy Nomad on June 1, 2012 at 11:58 AM

And as long as there is a threat of higher taxes on capital investments, and completely unpredictable employee heath care cost, those private dollars will remain on the sidelines.

Rovin on June 1, 2012 at 11:40 AM

But there are all those unemployment dollars priming the pump for future prosperity or something. Just ask Pelosi.

Happy Nomad on June 1, 2012 at 12:03 PM

first. for once

gerrym51 on June 1, 2012 at 11:26 AM

Really? :)

———–
The Irish voted for more handouts via EU today. They definitely are not the Swiss.

Schadenfreude on June 1, 2012 at 12:08 PM

Obama’s model for ‘success’

tom daschle concerned on June 1, 2012 at 12:13 PM

If that’s the case, then what is it that’s keeping all those private dollars waiting?

Lost in Jersey on June 1, 2012 at 11:39 AM

Uncertainty. Fear. The same reasons foreign investors don’t flock to Zimbabwe.

a capella on June 1, 2012 at 12:13 PM

European socialism works!

Mike Honcho on June 1, 2012 at 12:19 PM

A “central authority” chosen by whom? Unelected bureaucrats and Eurocrats? Will they be German or French or Spanish or Greek?
Steve Z on June 1, 2012 at 11:37 AM

If I was a blogger on a conspiracy site, I would say that they have already chosen who will lead them. Good Ol’ Prince Charles has been looking for something to do.

LoganSix on June 1, 2012 at 12:19 PM

Uncertainty. Fear. The same reasons foreign investors don’t flock to Zimbabwe.

a capella on June 1, 2012 at 12:13 PM

Exactly. Uncertainty resulting from massive government deficit spending. I was trying to make that point to edshepp on June 1, 2012 at 11:32 AM, but he seems to have disappeared.

Lost in Jersey on June 1, 2012 at 12:22 PM

Is bayam still in hiding?

steebo77 on June 1, 2012 at 12:26 PM

In Europe, they see the acute problem as a lack of central authority to do anything

They might want to read The Federalist Papers for a solution to this problem.

ss396 on June 1, 2012 at 12:27 PM

And the Europe hating right wing rejoices…

uppereastside
/

PatriotRider on June 1, 2012 at 11:55 AM

…you’re saving him time! HA!

KOOLAID2 on June 1, 2012 at 12:30 PM

Big collapse or piecemeal collapse?

forest on June 1, 2012 at 11:44 AM

Probably, a big collapse. I’ve been posting about the economic tipping point for a couple years. As more and more people, consumers, lose their work, their spending habits change. They buy less.

Demand drops, manufacturers lay off due to lower demand and on and on until the economic contraction reaches a point where the snowball races down the hill and smashes into the boulder at the bottom.

The socialists running this country will refuse to take the requisite steps to correct the problem. Obama is out today proclaiming how many jobs he has created and telling people to ignore today’s news.

The April and March jobs reports were also “revised” downwards.

He’s a liar, and more interested in campaigning than doing his job. Today he will attend six fundraising events, rather than deal with this problem. A problem of HIS MAKING.

dogsoldier on June 1, 2012 at 12:43 PM

Barry has a plan! MORE taxes!

GarandFan on June 1, 2012 at 12:48 PM

This really sounds a lot like the late twenty’s and thirty’s Germany, one difference, the USA has the socialist running the country………….;-(

angrymike on June 1, 2012 at 12:48 PM

Either Europe needs to integrate into one sovereign nation so that Greece and Spain can’t game the system without Germans having some say in those policies, or the separate nations need to return to separate currencies.

This was the goal all along: one nation.

search4truth on June 1, 2012 at 1:00 PM

ED:

“The political/debt crises are the inevitable outcome of shared currencies with separate economic approaches.”

Whoa, Ed. Is this not the exact same thing going on in the United States between, say, California and Texas… California and anywhere… really…

Washington Fancy on June 1, 2012 at 1:04 PM

Are the “Occupy Eurozone” type anarchists revving up?
I haven’t heard anything.

tomg51 on June 1, 2012 at 1:14 PM

So, aside from speaking “Austrian” what are the Austrians doing right to only have a 3.9% unemployment rate? Or is that even accurate?

Kraken on June 1, 2012 at 1:23 PM

Assigning an average number to the entire Euro-zone is somewhat meaningless, since the economies are so diverse. What is really happening is that some economies are struggling, while others are treading water. The overall average number is not very representative of the situation.

TouchdownBuddha on June 1, 2012 at 2:38 PM

EuroZone jobless rate hits new high

Next week?

California jobless rate hits new high

sdbatboy on June 1, 2012 at 6:22 PM

You should change that sign in the picture to read; “For Lease”.

Bulletchaser on June 2, 2012 at 3:27 PM