Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
  1. Within a currency zone and its linked currency partners, maybe, but not wrt the rest of the outside world:  The EZ will be exporting deflation to USA, UK and the rest of the world, reversing the earlier trend.

  2. Yes this will be a key battle. Some German bankers have already been quoted as saying they expect Syriza to default/renege on their election promises.  I hope they are in for a shock.

Partly because of its demographics and age profile and partly because of the continuing erosion of its leadership position in the world, Europe has long been and will continue to be a low growth zone. Call it secular stagnation if you wish. However I am optimistic we will see an uptick in the business cycle for the next two years at least (always subject to unexpected shocks) and who knows after that.  

It should be noted, however, that the beneficial effects of QE, devaluation, and even lower oil prices and interest rates are to some extent once off which can kick start a recovery but not change longer term growth averages. I am predicting a cyclical upturn, not a fundamental shift in economic performance - unless we see Syriza kick starting a democratic revolution throughout the EZ. Not impossible, but unlikely, I would have thought.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jan 27th, 2015 at 09:15:07 AM EST
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