Europe's monetary and debt woes are now clearly having an effect on its ability to do business – which is a yet more frightening prospect, than the crisis we are already living with.
Because without the ability to do business Europe cannot even continue to generate the value it currently does and which it already overpays itself for in its aggregate life style. In fact, Europe needs to do much more business, and export it, to pay for the life-style it gives itself and reduce the national debts.
It may seem an apocalyptic view but there is the evidence in the latest numbers from the World Semiconductor Trade Statistics, published by the Semiconductor Industry Association.
Globally the situation is not good with semiconductor sales in March, April and May (which are represented by the three-month average ascribed by the SIA to May) generally down. The Asia-Pacific region is down 1.9 percent on the same period in 2011. The Americas region is down 3.2 percent. Japan is up 0.4 percent.
But look at this, the European region is down 13.6 percent compared with a year before. In global statistics terms that is a major percentage change. The equivalent figures in March and April were 15.4 percent and 14.4 percent. Basically it appears that in 2012 Europe's drawn-out financial woes are driving a significant chunk of business out of the continent.
It is likely that startup businesses are not happening, particularly in such countries as Greece, Portugal and Spain. Similarly inward investors are putting any plans they have on hold. "Let's not open up in Europe right now, best to see how the dust settles." And multinational companies are likely to be shifting their weight off their European foot and on to another, most likely in the Asia-Pacific region.
And it was just a few short years ago that Europe was talking about the Euro replacing the USD as the global standard.
Just imagine what would happen to the US, if our economy worked like that of the Eurozone. Imagine, for example, that different states set their own government funded entitlement programs and their own affinity for government as the main employer of the work force, and then expected to be supported by other states with less generous policies. And imagine further that the work force was disinclined to move to states that had the jobs. It would never work.
I don't see any evidence of the structural reforms needed to have a viable common currency. Does anyone else? How can individual countries continue year after year with deficit spending, resulting in sharply increasing debt over time, and expect other countries to pay that off out of the goodness of their hearts?
The way this worked in the past was that each country could establish its own monetary policy, e.g devaluing their currency to "pay" the bills accumulating from overly generous entitlements, and they would move on. The real wealth would obviously decrease, in comparison to other countries, but at least they weren't asking taxpayers from other countries to fund their largesse.
Sorry, but I've never understood how this experiment was supposed to work, nor why so many countries were so eager to join in, even dating back to the signing of the Maastricht Treaty.
Worrying indeed. It would be interesting to see the latest quarter GDP figures from across Euroland. My impression is that Germany is holding well (as Expat Canuck said above). Britain and France also do not seem in big trouble (again this is just anecdotal from my recent trips). Not sure the same could be said about Spain and Italy though. Europe needs a coordinated response to this crisis, and that is not happening... yet....
As an expat Canadian now living and working in Germany, I don't really see any sign of a slowdown. The auto industry is going flat out and the joke is "Euro crisis, What Euro crisis?" To be honest though, we are starting to see an influx of Greeks, Spaniards and Italians coming into Germany looking for jobs. While this is good news for the Germans in that they're attracting the best and brightest, it is disasterous for the rest of Europe as the talent they need to recover is now gone, and gone for a long time. Hopefully the rest of Europe will come to realize the need for sensible policies so as to prevent themselves from going over the edge of a cliff.