After a brief respite, optimism (and economies) in Europe decline again
When the European Central Bank moved in early September to approve a plan to purchase unlimited quantities of shorter duration bonds from struggling countries in the Eurozone, markets and investors embraced it with some optimism. But, as Financial Times columnist Wolfgang Morgenthau notes, the buzz has worn off.
In addition to maintaining that an agreement on a banking union is actually more important than the eurozone bond, Morgenthau writes, “Whenever the ECB helps, the political process slows down. This is the true tragedy of the eurozone’s crisis management. We are now back at the point before Mr Draghi announced his programme – where the stated policies are inconsistent with a survival of the eurozone.”
Recent manufacturing data reflects the sentiment among some analysts that the union is slipping back into recession, and rising unemployment figures only serve to cement that belief.
The grim reality and the biggest challenge for non-EU nations is to move their economies forward by avoiding collateral damage, which is proving difficult, particularly in Asia.