Friday, December 07, 2012

Down For The Count?

Fellow SLOB DDE posted recently that the Euro-area was now in a recession. The WSJ is reporting that Germany's central bank is predicting that even mighty Germany will experience a recession next year.

Give their massive debt loads and hopelessly regulated industries, will they come back up without massive upheaval? It's going to be awful hard to stave off default in the big countries with falling tax revenues. If you think about the mechanisms for recovery, there aren't many left open to them. Robert Reich's fascist fantasies aside, there aren't going to be massive stimulus programs from bankrupt governments. The ECB has already cut rates to practically nothing and has been printing money like crazy.

The only thing left is a total rethinking of the business-government relationship and an increase in economic freedom. After watching the Spaniards and Greeks freak out over such things earlier this year, I can't see that happening without plenty of rioting.

Of course, they could do nothing at all and let things continue as is.


W.C. Varones said...

Au contraire.

They just haven't been printing money with enough vigor.

I expect them to take a lesson from Zimbabwe Ben and choose devaluation rather than default.

K T Cat said...

Which will lead to ... massive upheaval.

Doo Doo Econ said...

Thanks for the link love! As far as Europe, I blame the Mayans. 8)