One of the biggest problems the EU is going to have is Demographics, and too much social spending going to non productive parts of the population. Of course we have a lot of politicians in the America who want to turn us into Europe and give us more problems than we already have. Brandon
Also believe that Europeans are not that High on consumption as their NA counterparts are. When mentioning Europeans, that considers only Western Europe.
Not really. They have an adundantly growing sub-population actually. It's no secret that in about fifty years, Europe will be Islamic. Some have called "Eurabia". You can even read about it in Wikipedia: http://en.wikipedia.org/wiki/Eurabia I have heard the quality of their immigrant workers come into question but I don't know if it's true or just racial outbursts. I know that the quality of our Mexican immigrants is as a whole outstanding: they integrate fairly well into the melting pot, are hard working, upwardly mobile, moral, etc. But, from what I have read anecdotally, Europeans feel disappointed in their arabic immigrant population. Any (non-racist) insights would be much appreciated...
Agree about the Mexicans in the US. They have a similar value structure to us, and I don't really see them as being all that dissimilar to the Irish, Italians, Greeks etc that came in years past. However, the Muslims going to Europe do not share a culture with the societies they are entering into, and thus might not integrate as well, if at all.
I do think the basic point of the original post is a good one. The EU has traditionally favored slow growth over potential inflation and no one thinks that will change anytime soon. I'm not convinced they'll go into a deep recession but I would bet they'll be hurting 3 to 6 months from now and the ECB may very well not lower rates at all this year. Dat's how they roll.
Yes, and it's interesting how highly correlated everything is. Been watching bank stocks around the globe and they all move in unison. Their chart patterns in the last few weeks look like xerox copies of each other. And these are all banks that have widely varying sub-prime exposure...
What we're seeing is an intellectual battle between 2 economic schools... FED is behaving ina keynesian text book manner; and the ECB is bahaving in an Austrian Text book manner. I'm inclined towards the Austrian school, so I think that the European approach is the way to go. Only a fool repeats the same mistakes expecting a different outcome, the keynesian policies taken by nixon had a horrendous effect on the US economy [specially on the middle class]. Since the Bush administration, the US has turned back to it's previous errors [keynecian policies], and that's going to be an expensive mistake. Inflation is going to be a problem for the FED in the next 6 months... there may be a recession comming [or even depression] on both sides of the atlantic, but at least the Europeans won't have high inflation during the recession. Stagflation is a nasty beast, you get the worst of both worlds, a slowing economy and soaring prices on consumer goods [food and such...] It's true, the FED might be able to spark new bubbles and bail the economy out of this recession... but the business cycle is unavoidable, and delaying the crash only makes things worse.
Not really EMU based monetary news but close enough, and of VITAL importance in the US real estate crisis, is the LIBOR collapse - down an astonishing 200+ BP in roughly 6 months. Very important for UK based borrowing as well - I've read 92% of loans there are variable - plus Brits have no basic consumer protection against prepayment penalties. I still think LIBOR based lending needs to be outlawed in the US though.
I am more inclined to think that the Fed has been instructed to keep the boat afloat by any means available ( and that includes continuing to lie) until the elections. The next gov will immediately raise the rates and attack inflation. I say this not because I believe the next gov will be clever but simply because they are politicians and will make certain that this mess is dumped at the feet of the outgoing gov. And what a mess it will be by then.
Actually, I think the Fed just keeps growing the money supply at a steady 6 or 7%, day and night, 365 days a year, year in and year out. Just look at M2. The problem is that this growth rate is way too high for our behemoth economy.