Signs of life for chronic crisis
What is unbearable is the waiting, the gap in suspense yet. The thousand and one times announced European recovery begins to take shape with the occasional sign of life encouraging. The unbearable unemployment rates just given a break in the neediest countries, improve business confidence index, the price of housing in Ireland up for the first time in years. Here and there are encouraging signs that the markets translate into a summer of apparent calm and encourage optimism of the European institutions. Yet here is Europe, in that hesitant yet: the economy may be bottoming after year and a half into recession, as advocated by Brussels, but the continent awaits an anemic recovery in which any fright and anguish arsenal is formidable, can sour the greenish hovering in some data, like in one of those cocktails that contain angostura. Ricardo Hausmann, Harvard, has documented 83 false economic takeoffs in recent years. Swallows Europe not to be the next on the list.
And if you really get recovery, the eurozone take long to return to what it was. After those magic words Mario Draghi just a year ago ("I will do what is necessary and, believe me, it will be enough"), the risk of rupture of the euro has provided, that air of plague ulcers who were betting on a stampede fades . In return, the eurozone faces a chronic crisis, because that "everything necessary" is not enough. Neither the ECB activism falls short, and Brussels (or Berlin) has managed to find the right policy mix.
Opposite signs, a pair of data. The richness of the eurozone is 2008 levels, employment, on 2006 figures. The euro zone has fallen five years in terms of GDP and more than seven years in employment, according to Eurostat. None of that is going to recover from the overnight. And it is statistical averages: some enjoyable is experiencing a crisis (Germany) and there are increasing numbers of countries with depression. "That disparity, which has increased in part because of the economic prescriptions applied, becomes increasingly difficult, and especially more potentially dangerous, the management of the eurozone," summarizes Paul de Grauwe of the London School of Economics.
Blyth, De Grauwe and Jacob Kirkegaard of the Peterson Institute, emphasize weak growth awaits EU for years and doubts about banking. Nothing portends a cataclysm, but there are suspicions about the health of banks, who do not believe (and without it there is no recovery) because they are crammed with toxic assets, poisoned by the incestuous relationship between your balances and public debt. "Greece and Portugal need more money, you can get after the German elections. The banks also need capital. The ECB has drastically limited the risks of contagion, but before those two needs is the European strategy swallow "sums Kirkegaard. For De Grauwe, "Europe is adamant that this is a crisis of supply, it will be sufficient to get the necessary reforms. And no: this is a crisis of demand. We need encouragement and a real central bank, not the fatalism of no alternative to reform. "
Those two notes-the long lost luster in GDP and employment-muted enough to put short-term optimism. And the same can be said of the long term: the unfinished and sometimes disappointing eurozone institutional reform, perfect example of euro political sclerosis, also clears doubts. There have been decisive steps towards greater fiscal union to union bank: big words if not for the true extent of these developments raises a troubling divided.
Javier Solana, former senior EU foreign representative, applauds the European effort bluntly: "You may all go slowly, but honestly no one thought that Europe could go that far. The best thing is that is behind the possibility of a catastrophe. The hardest thing is that the foundations of European optimism have yet to settle. " Solana, who is from Berlin and is heading in the Middle East, which is sighted leaving the tunnel, but clarifies that the fitness of recovery is torn between tennis and golf: "The economy may rebound as a tennis ball if the German elections allow a shift in approach from Berlin to the crisis, if the EU uses trade agreements with the U.S., Japan and Korea, if China knows how to deal with the downturn. But we should not rule out a golf ball trajectory: a long stalemate to end up falling back into the hole. The European dynamic has come to an interesting point, but out of the crisis will not be a cakewalk ".
Blyth, De Grauwe and Jacob Kirkegaard of the Peterson Institute, emphasize weak growth awaits EU for years and doubts about banking. Nothing portends a cataclysm, but there are suspicions about the health of banks, who do not believe (and without it there is no recovery) because they are crammed with toxic assets, poisoned by the incestuous relationship between your balances and public debt. "Greece and Portugal need more money, you can get after the German elections. The banks also need capital. The ECB has drastically limited the risks of contagion, but before those two needs is the European strategy swallow "sums Kirkegaard. For De Grauwe, "Europe is adamant that this is a crisis of supply, it will be sufficient to get the necessary reforms. And no: this is a crisis of demand. We need encouragement and a real central bank, not the fatalism of no alternative to reform. "
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