Yea! Eurocrisis Over

Eurozone Industrial Production

Euro Leaders Declaring Worst Is Over Turn to Economy Woes – Bloomberg.

The recovering Eurozone meme started appearing in mainstream media outlets in November and has increased in prevalence as European stock and bond markets rise.

When a central bank prints money, inflation inevitably arises. While the CPI may be relatively stable, the massive monetary expansion  and the threat of even more monetary expansion by the ECB and world central banks has led to rising stock and bond prices. Rising financial markets are not signals indicating the end of the crisis but rather noise obfuscating the information presented by the fundamentals.

Eurozone industrial production declined 3.7% in November, and unemployment rates continue to rise particularly in the hard-hit periphery. The recession is even spreading to the core, the paymasters for the continent.

The politicians boast of “improvements” and the mainstream media breathlessly repeats these claims without critical analysis. The eurozone needs to take huge strides to get ahead of the problem, but its little steps ensure that the crisis will overtake it.

Debt in the PIIGS is still growing at a rapid clip, because these countries are still running enormous budget deficits. The only way the debt pile will begin to shrink is if they resume strong economic growth. Having written that, there is no reason to believe that a pronounced economic boom is around the corner for the eurozone.


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