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.
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....
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.
And of course there is no deficit spending in the US.. In Europe goverments are broke, but also a lot of the general population is broke or deeply in debt..in student loans, housing loans, and credit card loans... Not to mention that anybody who has had any serious disease for 40% of the population could mean loosing everything.. Yup.. the US is doing much better..
Are we not already "led" by Germany because the country makes substantial exports (sales of automobiles and light and heavy engineering) and is looked to as the source of bail out money by nations at the periphery of Europe from the Mediterranean to the Atlantic seaboard.
In effect, yes, but European countries such as Spain, Italy and even France want to have their cake and eat it. If they want German money, they should surrender fiscal policy (or some of it) to the paymaster of the European Union i.e. Germany. They are still resisting this though.
It's the same story with European defence. Europe needs money and heavy investment to have a truly independent defence policy, yet it's not prepared to let Germany have a normal army. Britain and France on their own cannot mount the necessary investment, and they can't expect Germany to fund a common European defence policy without having a major say/part in/of it. Another European paradox....
Much of my extended family lives in Italy and they are all professionals, i.e. engineers, scientists, professors, accountants, programmers, and businessmen, so I have quite a bit of inside information into the day-to-day culture.
Italy has always been a wonderful country, great food, great wine, great cars, magnificant houses, outstanding scenery and art, and lots of free time to enjoy it.
But prior to 1990, almost no one used credit for anything. They saved for what they wanted, and purchased with cash. And they all (rich and poor alike) enjoyed a marvelous lifestyle.
Then credit happened. Yes, the lifestyle improved slightly, but not for the basics; food, housing, and transportation. They took expensive vacations and bought BMW's. They ran up a huge amount of dept for stuff they didn't really need. And look what happened. Now they have to pay it all off, with money they don't really have.
There's a lesson here somewhere...
I think it's a smoke screen actually. The problems emerged when banks started gambling depositers money in the stock market buying and selling financial instruments they understood very little about. It's an agency problem at heart.