Reuters blog archive
from John Lloyd:
Sixty years ago, pondering the question of an unruly populace, the German playwright Bertolt Brecht mused, “Would it not be easier / In that case, for the government / To dissolve the people / And elect another?”
It was a rare piece of ironic criticism of East Germany’s communist regime for Brecht, since he usually supported it. But after the regime’s suppression of a workers’ revolt in 1953, he spoke out. It’s one of his most famed observations, trotted out whenever a populace is ungrateful enough to vote “against their own good.”
European Union politicians can sympathize. They’ve labored for six decades to fashion a union that was supposed to end wars and greatly expand economic markets, not to mention bring former communist states into freedom.
Yet the European people, instead of gratitude, now strain against an institution over which they have little direct say. In one of several recent books that express pessimism over the future of the euro currency, The Fall of the Euro, Jens Nordvig, the head of currency strategy at Nomura Securities, puts it bluntly: “The economic need for further integration is clashing with public sentiment, increasingly opposed to handing over additional functions to European officials.” Nordvig’s pessimism derives from the view that the politicians cannot ensure the EU’s political support, not that the authorities can’t manage the mechanics of the euro.
from Nicholas Wapshott:
There have been a lot of sighs of relief in Europe lately, where countries like Britain and Spain, long in recession, have finally started to grow. Not by much, nor for long. But such is the political imperative to suggest that all the misery of fiscally tight economic policies was worth the pain that there are tentative claims the worst is now over and, ipso facto, austerity worked.
Hold on a minute. Growth is good. Growth is what allows countries to pay down their national debt by increasing economic activity, putting the unemployed to work and making people prosperous enough to pay taxes. But gross domestic product growth alone is not enough to provide adequate sustained prosperity if it does not also lead to significant job growth.
Next time you ask an economist a question about the euro zone, be sure to enquire where their head office is based.
London? New York? Expect a pessimistic response on euro zone matters.
Frankfurt? Paris? Happier days are coming soon for the currency union.
So that's oversimplifying matters slightly - but as we've seen time over, institutions based outside the euro zone are likely to be gloomier about its prospects, and those based inside it are more likely to look on the bright side.
From the U.S., we've had lots of talk of tapering. In Europe, the latest fad phrase in the financial world is “austerity fatigue”.
It’s a strange euphemism, somehow disconnected from reality. More than 19 million euro zone citizens were out of work during May, roughly equivalent to the combined populations of Belgium and Austria. Youth unemployment is on the wrong side of 50 percent in Greece and Spain.
Ask an economist a question about the euro zone, and the answer will as much depend on the location of their head office as any analysis of the data.
It's been noted before (here, here, and here), but economists and fund managers working for euro zone-based banks and research houses tend to be optimists about the euro zone. Everywhere else - including Britain, North America and the Nordics - they tend to be pessimists.
Another month, another rise in the number of jobless in the euro zone.
As expected, the unemployment rate hit a new record 12.2 percent in April, according to Eurostat on Friday, meaning some 19,375,000 euro zone citizens are out of work.
That's more than the populations of Austria and Belgium combined and almost a quarter are aged under-25.
from Thinking Global:
Occasionally a public opinion survey surfaces that signals a seismic event. That is the case with a new report from the Pew Research Center that measures the widening tremors of a political earthquake now shaking Europe.
A sudden turn for the worse across German companies should clinch an interest rate cut from the European Central Bank next week, or in June at the latest.
That's because the latest PMI surveys, which have a decent correlation with economic growth, suggest the German economy shifted back into reverse this month, against the expectations of economists.
from Photographers' Blog:
By Yorgos Karahalis
I've been working in the media industry since 1986 and I can’t recall the last time Cyprus, the small divided Mediterranean island, attracted so much attention since the 1974 invasion by Turkey, which stills keep the island and its residents separated.
A decision by the European Union for a "haircut" on deposits in all Cypriot banks made the country one of the top stories in the region and across the world. Various scenarios for Cyprus’s financial meltdown appeared everywhere.
Optimism in Germany is roaring and consumers across the euro zone are starting to become less gloomy. But the latest hard economic data are a reminder of the difference between confidence that things are going to get better, and the hope that they will.
For the moment, we only have the latter.
Friday's German Ifo business climate survey topped even the highest expectations, as did the ZEW economic sentiment indicator on Tuesday. Euro zone consumer confidence improved this month too, and the mood in financial markets has been largely buoyant since the start of the year.