ORIGINAL
What happened in Japan some years ago is now happening
in Europe. Deflation has arrived and with it all of its inconveniences. A
serious wariness about how to sustain the Eurozone and its debt rates is now
exploding and a tense atmosphere can ne breathed Europe. Although the whole EU
is immersed in this critical economic situation, different countries are approaching
this situation in various ways. For example, the known as PIIGS are
implementing austerity policies without offsetting any monetary stimulus. This
directly affects the population by growing of the unemployment rates and basic
care needs. Why is this happening to the PIIGS? Because of the “denominator
effect” this means that debt is growing faster than nominal GDP. On the other
side there is Germany that apparently is not doing bad, but is also at risk
because of one the possible solutions that is being considered is that “Club
Med” gets together with Germany so that it can implement the relation policy.
Another possible solution could be inflation, but for the moment the option governments,
politicians, economists … are taking is to hope for global growth to save us.
CORRECTION
Ambrose Evans-Pritchard in October 23rd
2013 wrote for The Telegraph an
article titled “Europe already has one foot in ‘Japanese’ deflation grave”. In
it he analysis Europe’s economic crisis and compares it with Japanese
deflation.
Japanese-style deflation is threatening Europe and
will end up worsening the debt crisis. This crisis affects the entire EU, but
many approaches to dealing with it are being explored. For example, the known
as PIIGS are implementing austerity policies without offsetting any monetary
stimulus. This directly affects the population by growing the unemployment
rates and basic care needs. Why is this happening to the PIIGS? Because of the
“denominator effect” this means that debt is growing faster than nominal GDP.
Germany, however, is not doing as bad, although is also at risk because of one
the possible solutions being considered is that “Club Med” gets together with Germany
to implement a relation policy. Another possible solution could be inflation,
but for the moment the option adopted is to hope for global growth to save us.
