Just because it has stopped raining for the first time in 12 years (or does it just feel like 12 years?) and the sun has actually put his hat on and come out to play, well for about an hour an a half, anyway, you might begin to feel the spirit of euphoria. Well, I look upon it as my duty to stamp on all that sort of thing and return you all to your normal state of misery!
First of all you can forget about all those hushed (and sometimes not so hushed) whispers about recovery in the UK. Most of it is based on consumer spending which is not at all the right sort of recovery for us to have. What we need for a real recovery is a steady growth in exports. For that we must depend enormously on Europe which still takes the biggest chunk of what we do export. And it is in Europe that the really dire news is to be found. I have written it before and I will repeat myself now - nothing has been solved in Europe - absolutely nothing! But don't take my word for it, try Desmond Lachman writing in the WSJ, a fairly detached observer from the American Enterprise Institute:
A principle reason for this pessimism is that Europe's macroeconomic policy setting is not conducive to a sustained economic recovery. Europe's longest economic recession in the postwar period only ended in the middle of 2013, having brought unemployment to a record 12.3%. Underlying all this was the pursuit of budget austerity and the onset of a severe credit crunch, which led the ECB to a more restrictive monetary stance. To compound matters, these policies were being pursued within the euro-zone straitjacket, which precluded currency depreciation.
Yet in 2014, budget austerity—albeit of a lesser degree—will continue to be applied by most euro countries. This will be done in pursuit of the longer term goal of attaining structural budget balance. At the same time, there is every reason to fear that Europe's credit crunch, which has already resulted in the fastest pace of credit contraction in the euro zone's 15-year history, will intensify in the year ahead, since little is being done to recapitalize European banks ahead of the ECB's asset-quality review exercise. That exercise, which will be completed by the end of 2014, will induce European banks to de-leverage at an even faster pace than in 2013.
The Eurocrats are sitting on their hands and whistling in the wind and hoping, just hoping and possibly praying, that something, anything, will turn up. Well, something will definitely 'turn up' this year, or maybe next, but unfortunately that will be France and Italy's toes, according to Michael Snyder of The Economic Collapse blog via the good offices of Zero Hedge. Mr. Snyder could win a gold medal for misery at the next Olympics!
Over the past several years, most of the attention has been on the economic
struggles of Greece, Spain and Portugal and without a doubt things continue to
get even worse in those nations. But in 2014 and 2015, Italy and France will
start to take center stage. France has the 5th largest economy on the planet,
and Italy has the 9th largest economy on the planet, and at this point both of
those economies are rapidly falling to pieces. Expect both France and Italy to
make major headlines throughout the rest of 2014. I have always maintained that the next major wave of the economic collapse would begin in Europe, and that is exactly what is happening.
He continues with a list long enough to fill a toilet roll of reasons why Europe will buckle probably this year, maybe next. So, just as 'Dave 'n' George' line up the national economy for a clear take-off and a rapid climb leading up to the election May 2015 a veritable shit-storm will hit them. One almost feels sorry for them, er, one does, doesn't one?