The Washington Post’s Wonkblog reports [12]:
Europe hasn’t recovered, because it hasn’t let itself. Too much fiscal austerity and too little monetary stimulus have, instead, put it more than halfway to a lost decade that’s already worse than the 1930s [13].
It’s a greater depression.
And as the latest GDP numbers [14] show, it’s not getting any less so. Indeed, the eurozone as a whole didn’t grow at all in the second quarter. Neither did France, whose economy has actually been flat for a year now. Germany’s economy fell 0.2 percent from the previous quarter—and that after revisions revealed it had quietly gone through a double-dip recession in early 2013. Though that’s still much better than Italy: Its GDP also fell 0.2 percent, but its triple-dip recession has now wiped out all growth since 2000 [15]. The closest thing approximating good news was that Spain’s dead-cat bounce recovery continued with 0.6 percent growth. But it still has 24.5 percent unemployment.
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But it’s a little misleading to just call this a depression. It’s worse than that. Europe is turning Japanese. The combination of zombie banks, a rapidly aging population and, most importantly, too-tight money have pushed it into a “lowflationary [16]” trap that makes it hard to grow, and is even harder to escape from.
We agree with the diagnosis, but not the cure …
Diagnosis-wise, we noted last year that the British economy is worse than during the Great Depression [17].
But the “austerity” versus “stimulus” debate [18] is a false dichotomy [19]. If a patient is bleeding out, doctors have to suture the wounds [19] before they decide whether to give more blood or to taper off the amount of transfusions.
But Europe has never treated the wounds … As we noted in 2011, failing to prosecute financial fraud – on either side of the Atlantic [20]– is extending the economic crisis.
In 2012, we pointed out that European (and American) governments were encouraging bank manipulation and fraud [21] to cover up insolvency … trying to put lipstick on a pig.
Indeed:
- Fraud was one of the main causes of the Great Depression, but nothing [22] has been done to rein in fraud today [23]. Iceland is the only European country that did it right [24]
- Quantitative easing hurts the economy [25]. Even the Bank of England and the creators of QE admit that it is "pushing on a string [26]". But the UK did tons of QE instead of actually fixing the economy
- An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place” [27]
- Europe's sanctions against Russia are backfiring, wounding Europe's already-struggling economy more [28] than Russia's
- Authoritarian actions by the government interfere with the free market [29], and thus harm prosperity. Personal freedom and liberty – and freedom from the arbitrary exercise of government power – are strongly correlated [30] with a healthy economy [30]. A strong rule of law is the main determinant of GDP growth [31]. Trust is essential for a healthy economy [32]. But the EU has usurped the sovereign power of European countries [33] ... and many commentators believe that Europeans are losing freedom, liberty and the rule of law
Heck of a job, guys ...