Worried about recession in Europe?

So far Denmark is the only European country to be in recession. But there are fears that other EU countries might follow. Spain and Ireland have suffered a housing market collapse and many people have run up huge personal debts. Rising energy prices have added to the gloom. How worried are you about an upcoming recession? What are your worst fears?

20 Responses to “Worried about recession in Europe?”

  1. 1 Bob in Queensland
    July 28, 2008 at 14:35

    I’m not directly affected by the possibility of recession in Europe (though recession anywhere is bad for the world economy). However, if I lived in the Euro zone, I’d be very worried indeed about what might happen if some participants in the Euro hit recession while other countries don’t. The central bank would be pretty much powerless to find an action that suits everyone.

  2. 2 kpellyhezekiah
    July 28, 2008 at 17:01

    every crude oil energy dependent pruduction sector in the world will experience a downward trend in profitability until the cost of the war in Iraq and Afghanistan has been met. Mark my words guys. The thing to do is to STOP the wars and find a new begginning for iraq especially where its people can start to live normally and go about their daily business of life in peace and tranquility under a government of their own choice, not one that is imposed on them by enybody(and I hope they’ll choose democracy). Then more oil will flow unto the market and this will ease the price down after we have fully paid for the cost of this crazy war in iraq to about $60 per barrel.

  3. July 28, 2008 at 17:49

    it is amazing how few europeans understand the correlation between your economic situation and the health of the us economy. 200,000 naive germans show up to cheer barack obama. if he is elected, his anti-business socialist policies will destroy the us economy. if europeans want their economies to improve, you better pray that obama does not get elected, because if he does get elected, you will look upon 2008 as the good old days!

  4. 4 Vijay Srao
    July 28, 2008 at 18:32

    Its funny I seem to remember an economist/futurologist in the early eighties predicting the worst reccession ever in the first decade of the 21st Century on Newsnight (maybe).
    Europes set up is fundamentally wrong It punishes success and rewards poor and inefficient policy selection(The French benelovent fund).

  5. 5 Katharina in Ghent
    July 28, 2008 at 19:12

    I think the reason why most Europeans are not too worried about a recession is because the social net is still holding, so even if you do loose your job, it doesn’t mean that you loose everything. It is funny how outsiders are always bashing on how business in Europe is “punished” and lazyness “rewarded”, but in the end of the day we still have our pretty comfortable lifestyle, public health care and 4-7 weeks of vacation per year, and some of the biggest companies of the world are still based in Europe. Clearly, we must be doing something significantly wrong.

  6. July 28, 2008 at 21:12

    All the signs are that there is going to be a severe recession in the UK, and probably in Europe and the USA as well. To quote Milton Friedman:

    ‘I know of no recession that has not been preceded by a reduction in the money supply, nor of any reduction in the money supply that has not been followed by a recession.’

    60% of the UK money supply is created as mortgages. Mortgage grants are running at 57% down on the same time for 2007. Banks will not increase lending until the housing market has clearly bottomed out and it shows no signs of doing that. Estimates for the house price collapse vary from 30% to 50% of their peak in 2007. We have a long slide ahead.

    We are facing a reduction in the money supply of over 30% over the next few years. The Great Depression was caused by a reduction in the money supply of 27%.

    The boom years of the past ’63 quarters of successive growth’ were based on a steadily growing mountain of personal debt that was simply not sustainable. Now a great many people are going to pay a terrible price for our absurd debt-based money supply.

    The solution is simple. The solution is to ban the creation of the money supply by the private clearing-banks and to limit money creation to a public agency charged with maintaining a zero inflation rate, giving us a stable economy without housing bubbles, credit crunches or recessions.

    Anne Belsey
    Leader of the Money Reform Party (UK)

  7. 7 Robert
    July 28, 2008 at 21:30

    Specifically Europe, no the world at large yes. Free trade now means that if any of the major economies (US, Europe or China) has a problem they are likely to pull the other two done with them.

    I think the general feeling in Europe is more nonchalant about economic cycles than the US. As Katharina say’s the slight ‘punishment’ of success European feel during good times softens the blows during the bad and helps us weather the storm.

  8. 8 Bob in Queensland
    July 29, 2008 at 05:48

    @ Eric

    Er, wasn’t it President Bush’s “pro business, don’t regulate anything” policies that led to the collapse of the mortgage market and the current “credit crunch”? The American economy was pretty healthy under Clinton and when Bush took over and his policies have driven it into the ground–which drags down the rest of the world.

    As for describing Obama as “anti business” and “socialist”, huh? By any world standards the American Democratic party is still slightly right of centre. See the “Talking Points” for a discussion of political labels–because using this sort of language to describe Obama is neither accurate nor helpful.

  9. 9 Jonathan (sunny San Francisco)
    July 29, 2008 at 08:48

    So by Robert’s description, borne out by the unemployment rates in Europe, by enforcing a perpetual semi-recession, real recessions don’t hurt so badly. It’s one to go about things, I suppose. As for free trade, such as it is, by linking the world’s econimies more closely than otherwise, while enriching all of them, it forms a more genuinely helpful buffer against recession in any of them.

    I notice the intro made no mention of unemployment rates. Is employment considered no longer relevant to European economies because of that plush wonderful safety net?

    I’d suggest that the logical extension of Katharina’s argument is that nobody needs to work anymore, because money from someplace will somehow materialize to maintain a comfortable life. If that seems ridiculous on a large scale, it’s ridiculous on any scale, because wealth ultimately derives from a productive economy.

    The gigantism of European companies is a consequence of the VAT, and is by no means self-evidently desirable. It tends to stultify industries. In the US, net job growth in huge companies is zero or negative; the dynamism and growth is in small business.

  10. 10 Bob in Queensland
    July 29, 2008 at 09:36

    @ Jonathan

    Er….could you explain your linking of the size of European companies to the existence of VAT? I’m not clear on what you’re getting at.

  11. 11 Katharina in Ghent
    July 29, 2008 at 09:56

    @ Jonathan:

    If you get around it, I also would like an explanation of what the VAT has to do with “the gigantism of European companies”, would the same hold true for Coca Cola, Pepsi, McDonalds, Disney, Microsoft, Apple, etc? Europeans still work very hard, if you need evidence, look at the working hours of the WHYS team, but our higher taxes on income and profit means that we have less crime, less extreme poverty, better schools ON AVERAGE, better health care and generally a better standard of living, because these taxes are used to profit the general population, and not some buddy arms producer.

    You probably couldn’t listen to yesterday’s “Europe Today” show (I don’t know whether it airs in the US), but at least for Denmark, which is the first one to be officially in recession, it was mentioned that it is more of a correction than a real recession. Ireland and Spain may be more severe, but I’m confident they will push through, too.

  12. 12 Jack Hughes
    July 29, 2008 at 11:33

    Haven’t the french just abandoned their 35-hour week stuff ?

  13. 13 Vijay Srao
    July 29, 2008 at 15:10

    @ Kat the Flem
    First let me correct your misconception ,I am not an “outsider”,but then again it is unlikely that I will attend any of your Vlaams Belang meetings either.
    I had a similar response from a trade attache of the Netherlands when I collared him on how European Farm subsidies were killing Indian and African farming ,he said at least we can feed our own people and his country had roads,power and clean water.
    Why does Belgium even exist ?surely France the Netherland and Germany can come to some kind of understandind.

  14. 14 Katharina in Ghent
    July 29, 2008 at 16:59

    @ Vijay:

    I find your tone very insulting. I’m actually surprised that your comment got approved, but that way at least I can answer you.

    First of all, I’m not Belgian, and I see myself left of center, so Vlaams Belang is not on my list.

    Second, Europe is not the only one to subsidize its farmers, the US do it as well, as probably a lot of other countries.

    Third, Belgium exists. Point.

    This is all that I will answer to you.

  15. July 29, 2008 at 22:41

    @Katharina in Ghent

    Let’s look beyond the Vlaams Belang. Don’t you think Vijay has a point here? The enourmous subsidies by the Europeans and the US. kill agriculture in India and Africa. In fact, the subsidies are a serious threat to the free trade concept pioneered by the Westerners.

    As far as the existence of belgium is concerned, Vijay is actually not the first person to ask the question he ask. Mobutu Sese Seko, the ex president of the Belgian Congo is the first person known to have asked that question.

    He did so, to indicate that belgium lives off of colonialism. His point was say that without the Congo, would come to a halt.

    On a more serious note, we all have to worry about a recession in Europe. A lot of world economies are linked to the European markets.

    Just my 2 cents.

  16. 16 peter mose
    July 30, 2008 at 06:47

    reply to kath
    please explain to me and possible others how increased taxes =less poverty and crime ,
    as i live in england and we have excessiv taxes we also have the highest crime stats ,worst education ,dispite what politicians say, and a low standard of living,


  17. 17 peter mose
    July 30, 2008 at 07:59

    I see that with a subject like [recession ] there are not much interest,
    here in england we are so lucky ,lets put that in to perspectiv in this country we are used to bad news like our kids education is crap[no fault of the teachers] =exams are a night mare ,the format is allways changing/some times the results are sent to other countries/papers are marked by uni students=[cheap to employ] saves money
    but papers marked wrong,

    get a better education go to uni=£100000s debt no real jobs left ,europeans +people from other parts of the world with a beter under standing got the best jobs,

    taxes for ever going up/car tax/saveings tax/ aiport tax fuel tax /baggage tax/=we dont fly anymore,
    insurance = we pay the highest premiums =get the worst cover = i changed my vehicle from a 2ltr4x4 to a 1.6 estate car the result =higher premium,

    i am disabled and the gov decided to save money =so they are going to send me out to work ,[ i am 60 ]

    so as you can see here in england ,if you are working class we are used to living on the line , as for mps they get so much in expences they dont feel the pinch,

    so no matter how bad it gets ,it cant be any worse ,only a war could do that,
    and as the country is broke there is not much chance of that ,
    even the police are saying they cant patrol the streets because of the price of petrol,

    so there you go there are upsides and down sides to a recession
    thats why im glad i dont live in belguim or denmark imagine having a loverly stand of living and then having to suffer a recession!

    peter mose
    fully trackable

  18. 18 Katharina in Ghent
    July 30, 2008 at 11:12

    Dear Patou,

    You do have a point when you want to talk about agricultural subsidies. They are a huge burden on the EU budget and grossly benefit the big agricultural industries, much less the small farmers who may also contribute to maintaining the landscape. (I’m thinking of the farmers in the alpine regions here, mostly). A lot could and should be changed here so that the playing field with African and Asian countries is more level, and I’ve said so before on other WHYS pages.

    I will not engage in a Belgium/colonialism debate, because first of all I know too little about what happened in Congo during those years and second my feeling is that there were many (European) countries who had colonies during the 18th and 19th centuries, so singling out Belgium, which managed to grab one country (if I’m not mistaken) makes no sense to me. Similarly, a debate as to why Belgium exists seems completely fruitless to me, the same question could be asked about a lot of countries out there, and it is totally off the topic on this WHYS page.

    As to your last point that a lot of other countries are depending on the European economy, again I agree with you, but still my feeling is that it will not be as severe as some may fear. Somebody else mentioned somewhere (I think in one of the talking points) that the European economy isn’t growing as fast as others, and now we’re going into recession, and yet we don’t seem to worry… well, the thing is, if you’re used to 1-2% growth per annum, and then it drops to -0.5%, it’s a much shorter fall than if you were enjoying 4% or more.

    As to unemployment, which Jonathan raised, again, we’re not happy about it, but we’re used to it.

    To Peter Mose: UK is different, and always made a point of that. I’m sorry that you’re having a difficult life, and I wish I could do something about it to help you.

  19. 19 peter mose
    July 30, 2008 at 13:56

    reply to kath
    for gods sake dont send any money the gov will tax it !

    peter mose fully trackable

  20. 20 peter mose
    August 3, 2008 at 09:45

    ups and down of resession
    allo england calling
    recession is the product of markek excess /greed and bad gov policy,but there areup sides to to it overproduction is sorted =`to much of a good thing means you have to sell them cheaper / houseing= if you saved your money and were £20000 short ,well you can afford it now / all those companies gone into licquidation / = all the stock goes to auction and you can buy it realy cheap / then you can do boot sales ,be your own boss and flog it ,make some money pay the bills ,sorted]

    gas / electric / companies hike up the price by£30 / 40 % with more to come = it is then that you realise these bills will not come down so its time to look up wiki on the net and research those old ways of producing heat and power,

    biomass type boilers are commercily produced ,/ those of you who are handy at diy with mechanical ability can adapt /convert or build a working unit ,

    when people cant survive in a system because the system is broke they adapt
    and look for idears to save money i have a small workshop for my self so i thought i would check the consumption of my equipment ,believe me it mounts up so i decided to part renewable two very large batterys one large alternator
    one inverter = yes i know it costs money and jobsworth,s will say it will take you
    x amount of time to recover the cost / but they dont mention the electric companys
    charge 2 different rates for the product /they dont tell you the bill is estimated and they keep the interest ,dito service charge, vat , penalty charge for paying by cheque, =more fraud than electric,

    repair your domestic applyance,s/ fix your own car / learn how to do things
    you dont have to slave to the system that has broken down ,and why should you pay the bill for their greed.

    peter mose
    fully trackable.

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