Recession. This is the new horseman running around Europe. The debt crisis has been aggravated by stagnation in the United States economy while the ?leaders? of the Eurozone persist in blaming a failed model.
The prescription for the so-called German model, based on rigorous fiscal adjustments that Merkel has inculcated on the EU, have provoked grave constrictions in local economies. In Spain?s case, they have hardly reached a pyrrhic 0.7% at the end of the year, with drops of 1.9% in domestic demand during the first half of the year. An excessive rate similar to what Italy is experiencing, while in Germany it is not expected that the rate will go far beyond 2%. And that is what the markets are lashign out at now.
Europe needs a newer and fewer orthodox model, one that is more effective at incentivising investment, stimulating consumption and activating fanancing and industry. Only by growing can the European economies face down this debt. Insisting in failed methods will only bring us to recesions like our Greek neighbors.
