Mitchell, B. (2014) “The German ship is sinking under the weight of its own delusions“, Bill Mitchell Blog: Modern Monetary Theory… Macroeconomic Reality Blog, 16 Οκτωβρίου.
Eurostat’s recent publication (October 14, 2014) – Industrial production down by 1.8% in euro area – rightfully sends further alarm bells throughout policy makers in Europe, except I suppose Germany where denial seems to be rising as its industrial production levels fall to performance levels that the UK Guardian article (October 9, 2014) – Five charts that show Germany is heading into recession – described as being “shockingly poor”. The Eurostat data shows that industrial production fell by a 4.3 per cent – a very sharp dip in historical context for one month. Vladmimir Putin and ISIL are being blamed among other rather more oblique possible causes. But the reality is clear – the strongest economy in the Eurozone is now faltering under its own policy failures.
Eurostat tell us that:
In August 2014 compared with July 2014, seasonally adjusted industrial production fell by 1.8% in the euro area (EA18) and by 1.4% in the EU28 … In August 2014 compared with August 2013, industrial production decreased by 1.9% in the euro area and by 0.8% in the EU28.
Industrial production is in the Eurozone is still 13.1 per cent below the April 2008 peak and only 3 per cent higher than when the common currency came into being in 2000.
So essentially, after some growth in scale leading up to the GFC, the crisis has wiped out all those gains and the current bias is towards a further decline in industrial production.
The policy makers thus should explain why the monetary system is being retained that has failed to deliver any gains in 14 years in output.
The following graphs show the industrial production indexes (100 = January 2000) for Germany first and then Germany, France, Italy, Spain and Greece second.
Germany’s industrial output is back at December 2006 levels – in other words, the GFC and ensuring policy mistakes (austerity) have seen the economy essentially stuck in a stagnant state for 8 years.
Σχετικές αναρτήσεις:
- Mitchell, B. (2014) “The German experiment has failed“, Mainly Macro Blog, 07 Οκτωβρίου.
- Ilargi Meijer, R. (2014) “Germany’s Bad Numbers Are Great News For All Of Us“, The Automatic Earth Blog, 07 Οκτωβρίου.
- Siekmann, H. & Wieland, V. (2014) “The German Constitutional Court’s decision on OMT: Have markets misunderstood?“, Centre for Economic Policy Research, Policy Insight No. 74, Οκτώβριος.