WSJ: Man, the eurozone’s big economic rebound certainly feels a lot like recession…

posted at 4:31 pm on November 18, 2013 by Erika Johnsen

Over the summer, there was optimism aplenty that Europe was finally on track for a period of positive (if only barely) economic growth that would slowly and surely gain momentum over the next couple of years — but the third-quarter reports are in, and unexpectedly, growth didn’t pick up quite as much as some euro-financiers and -economists were hoping. Third-quarter growth tumbled (can I even say tumbled when we’re talking about growth in the range of less than one percent? …I’m going with it) from the second quarter’s 0.3 percent rate to a mere 0.1 percent, and the eurozone is nowhere close to even breaking even with the productivity levels and number of jobs they had pre-2008. As the WSJ reports, this supposed recovery sure looks an awful lot like a recession for a lot of people:

The euro-zone economy’s recovery from its long slump lost its momentum in the third quarter, compounding fears that Europe could get mired in a “lost decade” of stagnation, joblessness and political discontent. …

In much of the Continent, a meager recovery feels like continued recession to many. Particularly in indebted countries of Southern Europe, households and governments are struggling to pay down towering debts from incomes that are under pressure. …

Gross domestic product in the 17-country euro zone grew only 0.1% last quarter, or 0.4% at an annualized rate, data published on Thursday showed. The rate of growth was down sharply from the second quarter, when policy makers and economists began to hope that the clouds were clearing for the troubled currency bloc.

The halting recovery indicates that the euro zone’s crisis hasn’t gone away but merely changed and risks becoming entrenched. …

Hardly any euro-zone country posted strong growth last quarter, belying talk of a two-speed Europe in which some are plowing ahead. Even Germany’s economy grew only 0.3% last quarter, or 1.3% annualized, as weak demand in Europe and patchy global growth hit its exports.

As ever, perhaps one of the worst side effects of this never-ending euro debacle is not merely the terrible unemployment rate stuck at a record high of more than twelve percent for the entire zone, but the many unemployed youths who have paid-for college degrees yet somehow can’t seem to get their lives started:

European leaders pledged on Tuesday to make fighting youth unemployment in the bloc a priority but came up with no new ideas to tackle a problem that risks fuelling social unrest and distrust of mainstream parties.

Nearly 6 million people under the age of 25 are without work in the European Union, with jobless rates among the young at close to 60 percent in Spain and Greece. …

“It’s crucial to act quickly,” Hollande said. “We can’t abandon a generation … we need jobs and training that offer young people real prospects.”

And speaking of France, their economy by itself contracted by one tenth of a percentage point in the third quarter, which is definitely not going to do anything to help Hollande’s domestic popularity — and according to at least one report, a lot of French people are quickly losing patience with their Socialist president and his high-tax, low-growth regime. Disgruntlement is running high, via the Irish Times:

A secret document leaked to Le Figaro newspaper explains why President François Hollande caves in to the slightest sign of street protest.

“Throughout [French] territory . . . society is in the grip of tension, exasperation and anger,” says the ministry of the interior’s monthly summary of reports from 101 prefects, dated October 25th.

The corps of prefects was established by Napoleon in 1800 to be the central government’s eyes and ears in the provinces. The prefects are graduates of the elite École Nationale d’Administration and are considered neutral public servants.

The monthly reports are usually couched in careful, and sanitised language, which makes the blatant warning to the interior minister and president all the more alarming. “The legitimacy of tax” is now widely questioned, it notes. “This mix of latent discontent and resignation erupts through sudden bouts of anger, almost spontaneous, and not within structured social movements.”


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And this

…in other words, the big obama-economic-slump to come, soon. The WH does know it…why they once again want to divert, by extending the unemployment welfare checks.

Schadenfreude on November 18, 2013 at 4:34 PM

They welcomed Obama, and will have to suffer the consequences of an incomptent tyro in power like the rest of us.

Europe hoped for a weaker AmeriKKKa via Obama, and now they find that it was a dangerously delusional choice.

C’est la vie, as those sophisticated foreigners say.

profitsbeard on November 18, 2013 at 4:38 PM

And what is President Obama’s and the Progressives on Capital Hill advocating?

More of what they are doing….

…which leads to….

The euro-zone economy’s recovery from its long slump lost its momentum in the third quarter, compounding fears that Europe could get mired in a “lost decade” of stagnation, joblessness and political discontent. …

In much of the Continent, a meager recovery feels like continued recession to many. Particularly in indebted countries of Southern Europe, households and governments are struggling to pay down towering debts from incomes that are under pressure.

Gross domestic product in the 17-country euro zone grew only 0.1% last quarter, or 0.4% at an annualized rate, data published on Thursday showed. The rate of growth was down sharply from the second quarter, when policy makers and economists began to hope that the clouds were clearing for the troubled currency bloc.

The halting recovery indicates that the euro zone’s crisis hasn’t gone away but merely changed and risks becoming entrenched. …

Wherever there is mention to Europe or the Eurozone / Euro currency, you can substitute the US and the US dollar…

The definition of insanity remains doing the same thing over and over again, but expecting different results.

Athos on November 18, 2013 at 4:39 PM

“The legitimacy of tax” is now widely questioned, it notes. “This mix of latent discontent and resignation erupts through sudden bouts of anger, almost spontaneous, and not within structured social movements.”

Sounds like some houses, businesses and communities I know of around these parts.

But, then, I’m sure the NSA already knows that.

MTF on November 18, 2013 at 4:46 PM

By Obama’s standards this is good news…

PatriotRider on November 18, 2013 at 4:48 PM

Don’t worry, there is growing sentiment in the EU to adopt a new, proven recovery policy: Quantitative Easing!!!

That’s right, folks, that fabulously successful plan that keeps interest near zero, deficit spending high, and growth to a minimum (so it doesn’t get out of hand or anything) in Japan and the USA is about to hit the ground crashing with a Euro-socialist thud.

Because, as we all know, when a plumber screws up your neighbor’s pipes so bad the sewage runs in the sink, he’s the guy you want to call for all your plumbing needs!

Adjoran on November 18, 2013 at 5:12 PM

Wherever there is mention to Europe or the Eurozone / Euro currency, you can substitute the US and the US dollar…

The definition of insanity remains doing the same thing over and over again, but expecting different results.

Athos on November 18, 2013 at 4:39 PM

Read the minutes of the FRB meetings:

Wow, Ben, this whole Quantitative Easing thing isn’t working at all! We better keep it up!

Adjoran on November 18, 2013 at 5:14 PM

Is that growth effectively wiped out with inflation?

astonerii on November 18, 2013 at 5:24 PM

60% unemployment for those under 25?!? That really is a lost generation. Wow. That will be tough to overcome.

DanMan on November 18, 2013 at 5:28 PM

Is that growth effectively wiped out with inflation?

Since we don’t include food, housing and energy in any category of calculating CPI I would guess we’re keeping up with inflation in the abstract. If you actually pay for food, housing or energy you know we aren’t.

I must say if you have a 401(k) it is probably looking good over the last few months though.

DanMan on November 18, 2013 at 5:32 PM

I know my business with the Eurozone has picked up slightly the last couple of months. It’s certainly nothing to write home about, though.

Something of interest, though. I was bidding on some high-end collectibles at an auction in Geneva about a month ago. The kinds of things that would be in demand with American collectors, so I figured I had a shot since it was out of the country. No dice. Everything, and I do mean everything, went for a lot of money. It was the kind of buying I would expect to see if people with money didn’t want to be in money, but wanted to be in investment-grade goodies.

trigon on November 18, 2013 at 5:41 PM

As ever, perhaps one of the worst side effects of this never-ending euro debacle is not merely the terrible unemployment rate stuck at a record high of more than twelve percent for the entire zone, but the many unemployed youths who have paid-for college degrees yet somehow can’t seem to get their lives started:

In France, most college students don’t pay much for their education. French “universities” are heavily subsidized by the government, and tuition paid by the student is minimal, often less than $1,000 per year. There are also no admission standards, which results in universities being so overcrowded that many students don’t have desks, and must do their homework sitting on the floor in hallways, if they feel like it. Of course, the stagnant job market is competitive, so many university graduates find out that their degrees are not worth the low price their parents paid for them.

The monthly reports are usually couched in careful, and sanitised language, which makes the blatant warning to the interior minister and president all the more alarming. “The legitimacy of tax” is now widely questioned, it notes. “This mix of latent discontent and resignation erupts through sudden bouts of anger, almost spontaneous, and not within structured social movements.”

Except that any effort to cut back benefits of unionized employees in France leads to massive strikes and violence, which usually causes the government to cave to their demands.

Steve Z on November 18, 2013 at 5:43 PM

I wonder when Chancellor Merkel and other hard-working Germans have had enough of bailouts and decide to bring back the Deutschemark…

Steve Z on November 18, 2013 at 5:47 PM

So, Europe’s tanking?
Again? Pity.
How ’bout chateaux and country houses in the south of France and Tuscany: Any ‘fire sale’ pricing on those, yet?
No?
I’d like to pick one up as a spare, when the currency falls to about 3 Euros/1 dollar.
Because I want one. And because the EU deserves its self-inflicted misery.

orangemtl on November 18, 2013 at 6:03 PM

A world war and tens of millions dead will solve these ails.

Murphy9 on November 18, 2013 at 8:43 PM

Don’t worry, there is growing sentiment in the EU to adopt a new, proven recovery policy: Quantitative Easing!!!

That’s right, folks, that fabulously successful plan that keeps interest near zero, deficit spending high, and growth to a minimum (so it doesn’t get out of hand or anything) in Japan and the USA is about to hit the ground crashing with a Euro-socialist thud.

Because, as we all know, when a plumber screws up your neighbor’s pipes so bad the sewage runs in the sink, he’s the guy you want to call for all your plumbing needs!

Adjoran on November 18, 2013 at 5:12 PM

But be careful not to confuse incompetence with thievery. The way it works is to get your bribed friends on the county commission to ban all plumbers except for you, and now you’re the only plumber within a 100 mile radius. Oh, and folks have to pay you even if your plumbing is fine.

And the local papers will write articles about what a wonderful plumber you are.

Dr. ZhivBlago on November 19, 2013 at 6:28 AM