Europe is on the verge of plunging into a double dip recession. As the debt woes of the 17 eurozone countries continues to threaten any growth emanating from the continent, it looks more likely that the 27 country strong European Union will regress economically rather than progress.
Eurostat, Europe’s official statistics agency, disclosed that the entirety of the EU economy shrank by 0.2 per cent in the second quarter of this year. In the first quarter of this year, output was flat. Therefore, if not for merely getting by the slimmest of margins in the period inclusive of the months January to March, Europe would now be officially in recession. However it will take another 3 months before it can be that any such economic statement can be declared.
The news is sure to have rattled Europe’s political leaders as their economic policy of austerity continental-wide continues to dismally fail. To compare with the same time last year, the European economy has shrunk by an even more worrying amount of 0.4 per cent. Clearly the cost cutting agenda being implemented in bailed out nations such as Greece, Ireland and Portugal are not achieving the desired targets as both Spain and Italy are in danger of joining them with a bail out of their own.
However this news should not only concern citizens of the EU, but also President Barack Obama and his re-election campaign. As Europe is the USA’s biggest customer, it should come as no surprise that the exports of the States is not doing as well as it should be. As a result, America’s economy recovery is spluttering along, whereas it should be taking off. Of course, this is not the fault of Obama’s administration or Ben Bernanke’s Federal Reserve but the sheer ineptitude and inability of Europe’s leaders to solve their own crisis.
Unfortunately many Americans may interpret this as Obama’s fault and will vote for Mitt Romney in November’s presidential election. However as illustrated by Scott Cooney, Romney is about as bad as it gets! As Nobel laureate and Ivy League professor Paul Krugman said ”Ireland is Romney economics in practice.” Add that to Mitt’s shady tax returns as well as his gaffe-prone self and you’re looking at worst case scenario for the next POTUS. Luckily, Obama is ahead in the polls still but until Europe takes some action, there is a danger of the former Governor of Massachusetts getting into the White House.
Good article, Patrick, thanks! I’d agree that the EU’s troubles are definitely something to concern us on this side of the pond, but polls are consistently showing that Americans don’t believe either Presidential candidate can really solve the economic problems we face in the US. It’s heartening to know that a majority of Americans understand that there are so many factors at play, and that focusing on government alone is simply not the answer. China’s growth has slowed, there are inflationary pressures, there is automation that is taking jobs away from people…and of course, it all comes back to the divide between the rich and poor. Poor folks spend more than they make, rich folks don’t, so when the rich end up with more money, the flow of money through the system slows down. That, alone is perhaps the one indicator we should be most concerned about–the rich have about the same amount of wealth now as they did right before the Great Depression. That situation needs to change, and we need to rebuild a middle class.
Very good synopsis of the issues facing the US right now.
Thankfully Barack is tackling some of those issues, albeit slowly but surely, especially regarding the distribution of wealth. As opposed to Mitt’s policy of cutting the taxes of the elite.
Hopefully four more years of common sense to come!