08 January 2011

Still Too Optimistic

Europe’s currency project will probably survive, but the price paid by the euro zone area is likely to be dismal economic growth for the next decade.
The verdict comes from economists gathered here from around the world for the annual meetings of the American Economic Association, which run Jan. 7 to Jan. 9.
“The most probable scenario is that Europe will just muddle through,” said Pascal Petit, from the Centre d’Economie de Paris Nord of the University of Paris.

You think?

Let’s see here:  Europe is plagued by high prices, restrictive regulation, a fiat currency, out-of-control government spending, high public debt, a bailout of Greece and Ireland, and, on top of all this, sporadic civil unrest in Greece, Ireland, Britain, and France.  Of course it’s a mess.

Weirdly, the economists cited in this op-ed manage to come across as both tepid and too optimistic.  The worst is not behind Europe, it’s ahead.  The bottom will fall out eventually, and it will be absolutely miserable when it does.   Think it is likely to occur within the next ten years, which will lead to negative growth, when all is said and done.

The scariest thought, though, is how America has pursued the same policies as the Eurozone.  Does one really think the results will be any different?

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