European industrial production was down again in December - by 1.1% compared to November. The graph from Eurostat is above.
It continues to look like the early stages of a a recession in Europe. The obvious question now is how deep and how long that will last. My current best guess is that we will not see an abrupt rupture (as the ECB appears committed to avoiding catastrophic financial institution failure), but in the absence of that, the underlying imbalances of current account deficits in the periphery that cannot be resolved by exchange rate shifts will take a long time (years) to work out. I hold this opinion pretty lightly though.
I found this article pretty moving:
ReplyDeletehttp://www.nytimes.com/2012/02/19/magazine/the-way-greeks-live-now.html
- A quarter of all Greek companies have gone out of business since 2009.
- Half of all small businesses in the country say they are unable to meet payroll.
- It’s not uncommon to see decently dressed Greeks discreetly rummaging through garbage bins for food.
I remember riding through downtown Buenos Aires one night in 2002 or so, and seeing very well dressed and clearly well educated people picking through garbage cans on downtown street corners.
I am amazed that there are not more Greeks who want to go back to the Drachma. I don't think they will be willing to forgo that option forever.
@James: thanks for the link.
ReplyDeleteIt's an object lesson in what happens when a government is unwilling or unable to collect taxes from the well-to-do.
And in the meantime:
ReplyDeleteIran Cuts Crude Exports To Six European Countries
So industrial production will diminish further... (and debt will explode)
Alex
No sign of recession in the US.
ReplyDeleteExact same data series (industrial production) though the exact time period (December):
LINK