Europe falters

[Chris Burford <cburford@xxxxxxxxxx>]

Just when the US and Japan seem inextricably tangled in their economic
contradictions, the FT leads on the news that Europe is faltering too!

Oh dear! Who will be the generous spender of last resort to get the world
out of recession now?

There seem to be no rich countries able to step forward.

It couldn't possibly be that capitalism had better have an attack of
philanthropy, that the billions of the reserve army of labour in the third
world should step forward as the spenders of last resort?

How about the 21st century equivalent of 19th century construction of the
urban sewers - massive infrastructural projects - financed by special
drawing rights from the IMF?

No, wait a moment, that would give much of the employment to the local
labour force. Much better idea - a massive plan to bring the benefits of
advanced medicine to the people of the world.

That way they remain grateful, and the work creation goes into the
metropolitan economies and the profits of the monopoly capitalist drug
companies!

Chris Burford

London


___________________

FT lead today:

Concerns about the growth prospects for Europe deepened on Wednesday with
figures showing a sharp fall in German business confidence and a downturn
in industrial production in the 12-nation euro-zone.

...

With the recent US downturn, hopes have turned to Europe to provide
momentum for global growth. ...


Wim Duisenberg, ECB president, hinted on Wednesday night the ECB might need
to consider cutting interest rates because the US slowdown could be more
serious than thought. "The slowdown in growth there may be stronger than
earlier expected. That could have implications for world growth and
therefore for the euro area as well," he told a business school meeting in
Germany.

Germany's centre-left government is now expected to cut its growth estimate
for this year to 2.2 per cent or less, from its current forecast of at
least 2.6 per cent. ...

The Ifo business climate index for western Germany plunged to 94.9 from
97.5 in January, recording its eighth decline in the past nine months and
touching its lowest level since July 1999.

Figures published on Wednesday showed a 1.9 per cent decline in industrial
production in the entire euro-zone in January from December - more than
expected and reversing a rise in December.

The Ifo report caused the euro to drop by more than half a US cent to below
$0.90 as concern spread over German vulnerability to the US downturn. It
was also under pressure because of perceptions - especially in the US - the
ECB was too optimistic about the euro-zone's ability to escape the impact
of the US.