Europe's Troubles Continue

Europe’s Recovery Almost Stalls as Germany Stagnates (Update2) 

Feb. 12 (Bloomberg) -- Europe’s recovery almost stalled in the fourth quarter as waning spending and investment in Germany unexpectedly brought growth in the region’s largest economy to a halt.
Gross domestic product in the 16-nation euro region rose 0.1 percent from the third quarter, when it gained 0.4 percent, the European Union’s statistics office in Luxembourg said today. Economists forecast expansion of 0.3 percent, the median of 34 estimates in a Bloomberg survey showed. The recession in Greece deepened, with GDP falling 0.8 percent in the fourth quarter after a 0.5 percent slump in the previous three months.
European governments are struggling to contain the fall-out from Greece’s budget crisis as they phase out the stimulus measures used to pull the economy out of a recession. As market turmoil pushes bond yields higher across southern Europe, the recovery is in danger of losing momentum.
It’s “another piece of bad news for policymakers as they struggle to come up with a plan that soothes worries about the credit worthiness of the euro zone’s peripheral economies,” said Nick Kounis, chief European economist at Fortis Bank Nederland in Amsterdam. The recovery is “continuing, but at a snail’s pace.”
Greek Debt
The euro fell for a third day and was down 1 percent to $1.3558 as of 11:00 a.m. in London. German government bonds rose, pushing the yield on 10-year bunds down 3 basis points to 3.20 percent.
The euro has fallen 7 percent in the last two months on concern that Greece’s fiscal problems will spread to other countries.


This is another confirmation that we are entering another dip in this recession.  It should also be taken as a deflationary indicator.  The stock market should resume its downward trend shortly, with the US dollar rising in its wake.