17 Signs Of A Full-Blown Economic Depression Raging In Southern Europe

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,

When you get into too much debt, eventually really bad things start to happen.  This is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well.  It simply is not possible to live way beyond your means forever.  You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you.  And when it catches up with you, the results can be absolutely devastating.

Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies.  In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining.  And you know what?  None of those countries has even gotten close to a balanced budget yet.  They are all still going into even more debt.  Just imagine what would happen if they actually tried to only spend the money that they brought in?

I have always said that the next wave of the economic collapse would start in Europe and that is exactly what is happening.  So keep watching EuropeWhat is happening to them will eventually happen to us.

The following are 17 signs that a full-blown economic depression is raging in southern Europe...

#1 The Italian economy is in the midst of a horrifying "credit crunch" that is causing thousands of companies to go bankrupt...

Confindustria, the business federation, said 29pc of Italian firms cannot meet "operational expenses" and are starved of liquidity. A "third phase of the credit crunch" is underway that matches the shocks in 2008-2009 and again in 2011.

In a research report the group said the economy was caught in a "vicious circle" where banks are too frightened to lend, driving more companies over the edge. A thousand are going bankrupt every day.

#2 During the 4th quarter of 2012, the unemployment rate in Greece was 26.4 percent.  That was 2.6 percent higher than the third quarter of 2012, and it was 5.7 percent higher than the fourth quarter of 2011.

#3 During the 4th quarter of 2012, the youth unemployment rate in Greece was 57.8 percent.

#4 The unemployment rate in Spain has reached 26 percent.

#5 In Spain there are 107 unemployed workers for every available job.

#6 The unemployment rate in Italy is now 11.7 percent.  That is the highest that it has been since Italy joined the euro.

#7 The youth unemployment rate in Italy has risen to a new all-time record high of 38.7 percent.

#8 Unemployment in the eurozone as a whole has reached a new all-time high of 11.9 percent.

#9 Italy's economy is starting to shrink at a frightening pace...

Data from Italy's national statistics institute ISTAT showed that the country's economy shrank by 0.9pc in the fourth quarter of last year and gross domestic product was down a revised 2.8pc year-on-year.

#10 The Greek economy is contracting even faster than the Italian economy is...

Greece also sank further into recession during the fourth quarter of 2012, with figures on Monday showing the economy contracted by 5.7pc year-on-year.

#11 Overall, the Greek economy has contracted by more than 20 percent since 2008.

#12 Manufacturing activity is declining just about everywhere in Europe except for Germany...

Research group Markit said its index of activity in UK manufacturing – where 50 is the cut off between growth and decline – sank from 50.5 in January to 47.9 in February. It left Britain on the brink of a third recession in five years after the economy shrank by 0.3 per cent in the final quarter of 2012.

Chris Williamson, chief economist at Markit, said: ‘This represents a major setback to hopes that the UK economy can return to growth in the first quarter and avoid a triple-dip recession.’

The eurozone manufacturing index also read 47.9. Germany scored 50.3 but Spain hit 46.8, Italy 45.8 and France 43.9.

#13 The percentage of bad loans in Italian banks has risen to 12.2 percent.  Back in 2007, that number was sitting at just 4.5 percent.

#14 Bank deposits experienced significant declines all over Europe during the month of January.

#15 Private bond default rates are soaring all over southern Europe...

S&P said the default rate for Italian non-investment grade bonds jumped to 9.5pc last year from 5.7pc in 2012 as local banks shut off funding. It was even worse in Spain, doubling to 14.3pc.

The default rate in France rocketed from 0.8pc to 8.7pc, the latest in a blizzard of bad news from the country as the delayed effects of tax rises, fiscal tightening, and the strong euro do their worst.

#16 Lars Feld, a key economic adviser to German Chancellor Angela Merkel, recently said the following...

"The sustainability of Italian public finances is in jeopardy. The euro crisis will therefore return shortly with a vengeance."

#17 Things have gotten so bad in Greece that the Greek government plans to sell off 28 state-owned buildings - including the main police headquarters in Athens.

One of the few politicians in Europe that actually understands what is happening in Europe is Nigel Farage.  A video of one of his recent rants is posted below.  Farage believes that "the Eurozone has been a complete economic disaster" and that the worst is yet to come...

Most people believe that the eurozone has been "saved", but that is not even close to the truth.

In fact, it becomes more likely that we will see the eurozone break up with each passing day.

So who would leave first?

Well, recently there have been rumblings among some German politicians that Greece should be the first to leave.  The following is from a recent Reuters article...

Greece remains the biggest risk for the euro zone despite a calming of its economic and political crisis and may still have to leave the common currency, a senior conservative ally of German Chancellor Angela Merkel said.

But there is also a chance that Germany could eventually be the first nation that decides to leave the euro.  In fact, a new political party is forming in Germany that is committed to getting Germany out of the euro.  The following is a brief excerpt from a recent article by Ambrose Evans-Pritchard...

A new party led by economists, jurists, and Christian Democrat rebels will kick off this week, calling for the break-up of monetary union before it can do any more damage.

"An end to this euro," is the first line on the webpage of Alternative für Deutschland (AfD). "The introduction of the euro has proved to be a fatal mistake, that threatens the welfare of us all. The old parties are used up. They stubbornly refuse to admit their mistakes."

They propose German withdrawl from EMU and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns, and like-minded nations. The French are not among them. The borders run along the ancient line of cleavage dividing Latins from Germanic tribes.

However this all plays out, the reality is that things are about to get much more interesting in Europe.

No debt bubble lasts forever.  The Europeans are finding that out right now, and the U.S. won't be too far behind.

But for the moment, most Americans assume that everything is going to be okay because the Dow keeps setting new all-time record highs.

Well, enjoy this little bubble of debt-fueled false prosperity while you can, because it won't last for long.

A massive wake up call is coming, and it will be exceedingly painful for those that are not ready for it.

Greek Economic Riot - Photo by Ggia

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AynRandFan's picture

In the new world, we have conquered the cruelty of debt by simply making it disappear through the magic of monetization.  Unfortunately, in Europe, productive hard-working people in Germany are unwilling to devalue their currency thereby transferring wealth to the urban dependent classes of their southern neighbors.  Here in the U.S., debt is imaginary.  All loans are either made or underwritten by the Fed.

prains's picture

And Ayn Rand played no part in it?

WayBehind's picture

All they need to do is to sell Messi and Ronaldo and Spain will be just fine. Same for Italy, just sell some soccer players. Not sure about Greece though. 

ZerOhead's picture

Greece is absolutley ugly... however economists and psychics are predicting it to suck at a slower rate toward the end of the year when there won't be any more businesses left to close... if it doesn't get burnt to the ground this summer that is...


auric1234's picture

They could send in the spartans. 300 warriors against 280.000 MEUR of debt.


TPTB_r_TBTF's picture

The 300 [sic] Spartans could bring along their slaves to help in the fight, like last time...


Every Spartan soldier had 7 slaves in the battle of Thermopyle, ...[A Persian Perspective]

DaveyJones's picture

reminds me of the Iraq contractor soldier ratio. Same stuff, different names

Popo's picture

This coming TUESDAY, Cyprus has announced they will seize PRIVATE bank accounts.    How is that different from:

a) Theft

or b) A banking collapse?

thewhitelion's picture

Doesn't the "anounce in advance" thing diminish the effectiveness?

DavidC's picture

No, because it was announced early this Saturday morning and Monday is a bank holiday in Cyprus.


Totentänzerlied's picture

She's dead, in case you hadn't heard.

RockyRacoon's picture

Ah, but her legacy lives on!  Her message is burned into the brains of many an impressionable person.  Her books were a stepping-stone in my journey -- just not the final destination.

Dr. Sandi's picture

Ayn Rand got me thinking about things in new ways.

And after awhile, I stopped thinking about Ayn Rand.

neidermeyer's picture

Greece is that little town , Starnesville , just outside the remains of the 20th Century Motor plant ... and they're starting to throw stones.

neutrinoman's picture

Rand wanted a return to the classical gold standard: "objective money" she called it. Under a gold standard, none of this would have been possible. No aribitary debt and money creation, no bubble, no bust.

Frank N. Beans's picture

we need a graceful ausfarht


hampsterwheel's picture

Bullish - actually am tired of hearing about Greece et al.. and the potential zombie hords - wake me up when a Western Politician is actually shot, tried or hanged - until then - I refuse to believe anything bad will happen

The TBTF and TPTB are living up to their name "Too Big" - bigger than governments -bigger than gold, bigger than markets bigger than Adam Smith - they have proved them all wrong - we're doomed until we're not -

As long as there is no blood there won't be any change - seems like the Arabs are better men than the western man - the Western man see's nothing worth dying for - would mean no smart phone or American Idol or NFL -



SKY85hawk's picture

Dude, Unlock it before you post it.



You don't have permission to access /images/2011/08/maria-menounos-greek-nitro-magazine-august-2011-7.jpg on this server.

Apache/2.2.3 (CentOS) Server at pairody.com Port 80
McMolotov's picture

He doesn't earn a +1 till we can see Maria.

robertocarlos's picture

After you try to load the picture chANGE THE NUMBER 7 TO 6. iT'S A PICTURE OF A WOMAN.

McMolotov's picture

I expected more Maria skin, dammit.

robertocarlos's picture

Still lovely. Better with clothes on. Especially Meg!

Pure Evil's picture

So is it now appropriate to bring up the word 'vagina'. As in what a gaping maw!

Dr. Sandi's picture

Now that you've met my gaping maw, I'd like to introduce my groping paw.

ebworthen's picture

I see a welcome mat and an open door.

Dr. Sandi's picture

Be polite, wipe your feet before you enter.

Blano's picture

Hot damn that's nice.

are we there yet's picture

4food Your link is infected with something.... I had to close everything out and navigate back into zerohedge.  Use with caution.

willwork4food's picture

I've got anti-virus protection and it alerts me if there's a site problem. There wasn't a problem with this link. It's not porn, just a picture.

McMolotov's picture

There wasn't a problem with this link. It's not porn, just a picture.

Then there's a problem...

thewhitelion's picture

Don't bother.  Even if you get there it's spam city.

Son of Loki's picture

...and then there's China:


'The increasing total of dead pigs tossed into a river that delivers water to Shanghai shines a light on a Chinese pork industry with few controls.

SHANGHAI/BEIJING – The number of dead pigs found in a Shanghai river that provides drinking water to the Chinese financial hub has risen to 8,354, after local authorities pulled 809 more pigs out of the river on Friday.

The Shanghai municipal government has repeatedly assured the city's 23 million residents that tap water is safe. Shanghai locals, however, remain worried about water contamination from the swollen and rotting pig carcasses in the river.'

The rotting pig bodies in a river that supplies tap water to Shanghai has drawn attention to an ugly truth – China's pig farms are often riddled with disease and one way or another, sick animals often end up in the food chain.




8,354 !! This is beginning to look bad .....

Dr. Sandi's picture

Somebody needs to teach those fucking pigs how to swim. This is ridiculous.

Really, if they can't be bothered to protect themselves from drowning, they deserve what they get.

Dugald's picture


Rotting pig should go nicely with hundred year old eggs......

Dr Paul Krugman's picture

Interesting how the U.S. used correct fiscal and monetary policy - up until the sequester - and have found traction for a recovery, and Europe used austerity and have slipped further into a depression.

Maybe the G.O.P. and Europe's hawks should take a lesson from the Liberals and doves?

Missiondweller's picture

We had zero growth last quarter before the sequestor and are already in a recession (continued depression).

Latvia and Estonia prove that cutting costs (government) cause short term pain for long term gain.


Jani's picture

Mission: As a Latvian American, a greenie for you for the Lativia vs Krugman link, we don't get much press.

Government austerity can help economic woes, just tough to convice the politicians that they have to sever their own body parts.

epi_tis_thalassis's picture

Yeah and cutting population probably helped. That's what I would call a "solution" the nazi way:


"Austerity" is only a new term for the ancient game: appropriation throught debt on a finite monetary base. People work and produce and build and during this phase lending functions as tool for growth and nobody cares because there is "progress". But if money is indestructible (private or not) it is slowly drained out of the society and replaced by debt. And then a shock and voila! everything passes to the "lenders". That's how civilizations die. That's how the roman civilization gave birth to the middle ages (and maybe that's why islam abolished debt in the beginning).

That's what would happen to the life on the planet if it weren't for the cycle of water. If water were to stop evaporating from the oceans to return as rain, everything would be dead. If man is to build a sustainable civiliazation, there has to be a monetary system that recycles money and respects and serves values not wealth. Till then every cycle comes down to war and destruction.

Obviously an attempt at that is a constitution and a declaration on human rights but if the system is not clearly established or it is hijacked (as by the big bankers in the USA) it makes no difference in the end (as that famous Rotschild saying goes about laws and money issuing). International treaties are now stronger than constitutions, and money a higher value than human rights. There will be (more) pain of course.


Dr. Sandi's picture

Unfortunately, the obvious way to fix a lot of problems is for 'somebody' to kill off us old geezers and take all our stuff.

Fixes the Medicare problem, saves Social Security, and with the loot, it might even reduce the deficit for a couple of years.

And since humans are too stupid to remember their own history, their kids can have it done to them during the next demographic cliff.

"I tell you, this is a GREAT plan, Mr. President, and I'm sure you can sell it to enough of them to make it worth the effort."

This dumb idea of killing off the impoverished but energetic younger generations in war after war is so 20th Century.

r3phl0x's picture

As a millenial, I endorse this message. By murdering just two or three million boomers per day, together, we can greatly increase per-capita GDP.

Dr. Sandi's picture

It'll work.

And the fact that you're next makes it all seem fair to everybody.

prains's picture


how is the simple act of printing fictious fiat currency and calling it money, sound fiscal policy? If I had the printer that's what I'd do too but for some reason I'd be arrested for doing it.

Dr Paul Krugman's picture

The money is supporting finance, finance is supporting the economy; as the economy recovers revenue picks up.

Any questions?

dick cheneys ghost's picture

Im tired of paying interest on the debt..........