Economists Warn: ‘Severe Recession’ Headed For Eurozone Could ‘Spill Over’ & Take Down Rest of World
- Posted on May 22, 2012 at 11:18am by
Becket Adams
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PARIS (AP/The Blaze) — The 17-country eurozone risks falling into a “severe recession,” the Organization for Economic Cooperation and Development (OECD) warned on Tuesday, as it called on governments and Europe’s central bank to act quickly to keep the slowdown from dragging down the global economy.
OECD Chief Economist Pier Carlo Padoan warned the eurozone economy could contract by as much as 2 percent this year, a figure that the Paris-based think tank had laid out as its worst-case scenario in November.
In its twice-yearly global economic outlook, the OECD — which comprises the world’s most developed economies — said its average forecast was for the eurozone economy to shrink 0.1 percent this year and grow a mere 0.9 percent in 2013.
A woman walks past a closed-down travel agency plastered with concert posters in Madrid Monday May 21, 2012. Spain’s economy has contracted by 0.3 percent in each of the past two quarters & will shrink by about the same amount in the second quarter of 2012.
“Today we see the situation in the euro area close to the possible downside scenario” in the OECD’s November report, “which if [it materializes] could lead to a severe recession in the euro area and with spillovers in the rest of the world,” Padoan told reporters before the report’s release.
The report forecasts Europe falling further behind other countries, particularly the United States, whose economy is expected to grow 2.4 percent this year and 2.6 percent next.
“There is now a diverging trend between the euro area and the U.S., where the U.S. is picking up more strongly while the euro area is lagging behind,” Padoan said.
Europe itself is increasingly split between a wealthier north continuing to grow and a southern rim that is sliding deeper into recession, the OECD figures show.
Germany, Europe’s largest economy, will accelerate to 2 percent growth next year after 1.2 percent growth in 2012, while France, the eurozone’s second-largest economy, will expand 1.2 percent next year after 0.6 percent growth this year, the OECD said.
Italy’s economy, by contrast, will shrink 1.7 percent this year and 0.4 percent in 2013, the OECD forecast. Spain is also set to remain mired in recession, with contraction of 1.6 percent this year and 0.8 percent next.
Padoan called on eurozone leaders to adopt a “growth compact” to promote growth even while reducing deficits. French President Francois Hollande has made securing such a pact the focus of his European diplomacy in the first weeks of his administration.
So-called eurobonds – debt issued jointly by countries in the currency bloc – could be used to recapitalize banks, Padoan said. He also reiterated his call of six months ago for the ECB to do more to stem Europe’s crisis.
Graffiti in Athens reads: “Snow or rain, the jobless are always hungry.”
The ECB has an “essential” role to play in solving Europe’s crisis, Padoan said, both by using its balance sheet firepower to shore up banks and by lowering interest rates. The ECB should also consider renewing the “unconventional measures” it used last year such as buying up government bonds, “if there is need to cope with contagion problems,” Padoan said.
Asian economies will also do better than Europe, the OECD predicted. Japan is forecast to grow 2 percent this year and slow down to 1.5 percent in 2013, while China is expected to accelerate from 8.2 percent to 9.3 percent.
Despite their growth downgrades for Europe, the OECD’s figures are more optimistic than those of the International Monetary Fund. Last month the IMF predicted Europe’s economy would shrink 0.3 percent this year, with the U.S. expanding 2.1 percent.
The Associated Press contributed to this report.
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Comments (59)
DennisHand
Posted on May 22, 2012 at 6:31pmRead Aftershock if you want a look at what is happening and will happen.
Report Post »skimmer57
Posted on May 22, 2012 at 6:17pmGlenn tells us it’s the caliphate that is going to bring us down. No wait the Chinese no wait Obama no wait Muslim Brotherhood no wait Francis Piven no wait George Soros no wait liberal judges no wait Iran no wait and the list goes on while Barnum Bailey and Beck count his money it’s so true a sucker is born every five minutes and they all post on this thread!
Report Post »gomerpile
Posted on May 22, 2012 at 9:40pmSo, was he wrong about anything you listed? It seems like those problems all still exist.
Report Post »OTBoxer
Posted on May 22, 2012 at 4:30pmHans-Hermann Hoppe has the clues for solving the monopolist-caused problems once and for all!
Report Post »EP46
Posted on May 22, 2012 at 3:56pmYES…….Glenn drew this all out on the blackboard 2 yrs ago showing how all the world banks are tied together. Guess it is better to be late to the ‘awakening’ than to be absent .
Report Post »KC1
Posted on May 22, 2012 at 4:56pmTom Woods, Peter Schiff and every Austrain economist for that matter warned us long before Beck hoped on the band wagon. Luckily we have Romney who believes whole heartedly in Austrian Economics, no bail outs for the banks, auditing/dissolving the fed and plans on cutting a trillion out of the deficit his first year in office…
Report Post »or was that someone else?
soybomb315
Posted on May 22, 2012 at 5:06pmno that was some crazy guy – nevermind him
Report Post »hatchetjob
Posted on May 22, 2012 at 3:49pmI’ve been prepared for so long now, I’m tired of hearing about this and waiting for it. If it’s going to collapse I wish it would already.
Report Post »Independent4233
Posted on May 22, 2012 at 4:21pmI wouldn’t be surprised if we go through another four years of stop gap measures frantically imposed by the powers that be, but I seriously doubt it will go on much longer than that without big time chaos. We will definitely see signs of great danger as we get well into 2013, however. There’s only so much stimulus funds available before there are no more.
Keep your eye most especially on the EU. Since the US/EU banking systems are so intricately tied the US cannot avoid catastrophe when the dominoes begin to fall there.
Nothing has changed. Their frantic, desperate attempts to try to right this sinking ship by injecting liquidity is only a delaying tactic at best. We’re still sinking. http://www.trendsjournal.com
Keep your eye on Europe. As the EU goes so goes the US. Bank runs and riots have already began there. It will be no different here.
Report Post »txjb
Posted on May 23, 2012 at 7:56amAgreed , let it happen . I don‘t tell people until I’m blue in the face , their told one time , get prepared stock up .
Report Post »soybomb315
Posted on May 22, 2012 at 3:34pmworldwide depression??
Thats why I will either be voting for Ron Paul on the Republican ticket or a 3rd party candidate. You got to know who you are in the foxhole with
Report Post »scuba13
Posted on May 22, 2012 at 4:48pmSo your vote is going to Obama, good for you, you idiot.
Report Post »soybomb315
Posted on May 22, 2012 at 5:06pmconscience
Report Post »KC1
Posted on May 22, 2012 at 5:15pm@ Scuba I thought it was the Paulinistas that were supposed to be zealot like and mean? I believe it was Beck himself that told us to vote on principal not party. For you guys to call us traitors for sticking to our principals which are constitutionally based is hypocritical. In my experience its the Republican Old Guard that are full of hate and vitriol i.e your comments. Romney will lose, not because of Paul but because the GOP decided not to embrace the Tea Party/ Paul movement. Instead we got another Bush/Mcain void of constitutional principals. When the GOP gave us a chance to show them we would vote on principal not party its people like you that discarded the opportunity and fell in line. You and all other Romney supporters are to blame for Obamas inevitable re-election.
Report Post »West Coast Patriot
Posted on May 22, 2012 at 5:21pmScuba, By making Romney the nominee, you will be handing Obama a second term. It will be all you modern day Republicans fault. You guys just cannot stand a true conservative as a candidate, you keep nominating liberal leaning progressive Republicans. Ronald Reagan said it best:
“If you analyze it I believe the very heart and soul of conservatism is libertarianism. I think conservatism is really a misnomer just as liberalism is a misnomer for the liberals — if we were back in the days of the Revolution, so-called conservatives today would be the Liberals and the liberals would be the Tories. The basis of conservatism is a desire for less government interference or less centralized authority or more individual freedom and this is a pretty general description also of what libertarianism is.”
Report Post »– Ronald Reagan
DennisHand
Posted on May 22, 2012 at 6:30pmGuys, you have to understand that voting for a third party is just as good as voting for BHO. I’m not saying stay loyal to the party. What I;m saying is I will vote for the person who will prevent BHO from having a 2nd term. If he wins a second term, this country is toast. What I would like to suggest is that you do what I am going to do. I am becoming a committeeman for my county Republican Executive Committee. This way I, as a person with a teaparty mentality, can work from the inside to change the system. The REC is where policy is set for the party and where the endorsements come from. So, at this point its too late to do anything but work for the defeat of BHO, but we can start to change the party and then change the country.
Report Post »West Coast Patriot
Posted on May 22, 2012 at 6:43pmDennishand, I will look at reatlity. If Romney is nominated, he cannot win. He will not get the youth vote as they are fervent for Paul, they will vote third party or stay at home. He will only get a portion of the Independent vote as many are Paul supporters and will do the same as the youth. He definately will not get the disenfranchised Dem vote, they will hold their nose just like the Blazers are committed to doing for Romney. When you look at this, you should be able to see that Romney just cannot win. He does not have a base, if he did, he would be doing better at the district and state conventions, but he really cannot get enough supporters to show up. We all need to look at this reality, if you are serious about getting Obama out of the White House.
Report Post »soybomb315
Posted on May 22, 2012 at 7:43pm@DennisHand
Thank you for becoming active. We all need to. The difference between you and me is that I think we are already past “toast”. We are currently burnt toast with some sugar sprinkles on it.
Like you, we have not given up – we just see this country as being further down the road and not enough time to monkey around with someone like Romney for 4-8 years. We feel our vote would matter the most if given to 3rd party – so at least the republicans could see how many vote they WOULD have had…
Report Post »rahgoo
Posted on May 22, 2012 at 3:20pmAffordable rentals are the key to lower wages. If their rents were affordable workers could be hired for a few bucks a day. Chinese workers have low cost rooms while many American workers sleep in shelters. It would solve the problem if large tax breaks were given to those that rent out rooms to their low wage tenants.
Report Post »soybomb315
Posted on May 22, 2012 at 3:39pmGood technology and productivity beats lower wages
No matter what, our minimum wage is higher than what they are paid in China…So unless companies are ‘allowed’ to pay $3/hour it is a moot point
Report Post »LearningToLove
Posted on May 22, 2012 at 2:37pmThe Eu balls noose…first seperation..no snapping mind you…then severe pain and agony with everyone laughing at us, but they soon look down to see that they happen to have a U.S Balls Noose on.. then the jokes on them:)
Report Post »nothinghere
Posted on May 22, 2012 at 1:53pmyes a strong dollar is prefferable to a weak dollar,but only when other countries are faring well also,we are a big importer of goods,what do the average americans do when the price of gas is $4.00 a gallon,we use a lot less, so what we do export that price will go up and the other countries will buy less of what we sell.
Report Post »thanks to the unions,we are aleady over priced,and have been for years on our goods,our friends and neighbors such as government motors, ge,and several green co’s, are starting up plants everywhere but america,but the american taxpayer will be paying the lifelong benifits (via the stimulus) for the uaw union employees.
if that $1,000,000,000,000.00 stimulus went to help america,instead of going to o‘bama’s cronies,this economy would surely be different.
i hope romneny’s people show,and specificaly show where that $1,000,000,000,000.00 went to,and i hope they have o’bama on tape smirking,saying there no such thing as a shovel ready job,that inside the government joke is not funny to the millions of americans that are still un-employeed.
one commentor stated he did’nt believe any statistics coming from china,i feel the same way about the o’bama admistrations statistics.
we have’nt fixed one thing since 2008,in fact we‘re worse off but it’s being hidden,there’s been $1,000,000,000,000.00′s of dollars spread around the last 4 yrs.,yes the stock market has gone up,only because of the 401ks,and these are the people who will be devistated first.
jackact
Posted on May 22, 2012 at 1:42pmDigest this on two levels;
Report Post »If the ‘economists’ are Ivy League educated, no worries.
They only read about life in books but never actually practice their higher knowledge, hence Keynesian economics – the root cause of Europes finacial failure and a Ivy League ideology.
On another level, after Obama is removed in Nov, America will renew its pledge to constitutional conservatism and we will, drill, drill, drill
It will be a rosy future for America going forward.
Guaranteed.
:)
Elena2010
Posted on May 22, 2012 at 1:20pmIt is as it was.
When Germany collapsed before Hitler, the rest of Europe collapsed. That was transferred to the US which went fm the Roaring Twenties to the sobering Great Depression.
We have always been interlocked. It has always been a “small” planet.
Maranatha, Lord Jesus! Come quickly!
Report Post »audiemurphy
Posted on May 22, 2012 at 1:19pmRemember in the old testament there was a reset every 7 years all debts were forgiven regardless of what you owed and all slaves were set free.
Report Post »if there is a reset everybody should start fresh . I‘m not saying its a good thing or it’s right to get out of your obligations. But realistically the US is NEVER gonna pay back why they owe and neither are countries like Greece or Spain etc etc.
It is crazy to me that the trillions cam keep piling up and the FED and world bankers just enslave the politicians to their agendas and we all go along as the dumb citizens.
Washington was right when he said a national bank would enslave America and now we have that tied to a world bank……….. WOW!!!!!!
exciting times we live in ……..so so fast and so so misleading if you are not carefull!
Good luck everyone …….
soybomb315
Posted on May 22, 2012 at 3:42pmnice bible reference. I seem to remember that the hebrews were not allowed to charge each other interest.
Essentially, the result of the old testament principles on debt and interest results in very few people going into debt (since there is little incentive to lend). In addition, with the existence of debtor prison, there is even less incentive to borrow. The bible is clear – debt is bad
Report Post »dmerwin
Posted on May 22, 2012 at 8:38pmUnder that scenario with the current governments in place they would just go as they have been the banks would fail. The entitlement folks would get new credit cards and go to town every 7 years. I have read the same thing in the bible but they didn’t have banks, governments (the Israelites) and they were essentially doing personal loans to family members and did not have an overarching authority (government) that told them they had to make loans to poor credit risks. Just to put it in perspective.
Report Post »dmerwin
Posted on May 22, 2012 at 8:40pmSoybomb
Report Post »I rarely agree with you EXCEPT on economic matters. Excellent analysis.
Netsurfer2
Posted on May 22, 2012 at 11:52pmIn the old days, when you are in debt, you are considered a slave (indentured servant). It meant that you have no freedom left at all until your debt is paid and that you will work for a period of time in order to pay it off. Debt always portrait people to be irresponsible with the lack of integrity!
I personally think they should do away with all government programs that give gratuity directly! People should work like everyone else for what they get in life! Also taxes should be the same on every dollar that everyone makes!
Report Post »Git-R-Done
Posted on May 22, 2012 at 1:17pmThere isn‘t a single country on this planet that’s going to be immune from this upcoming collapse.
Report Post »Detroit paperboy
Posted on May 22, 2012 at 1:07pmJust sixty more years of socialism and welfare, and Europe will be fine……..
Report Post »AmericanFightingMan1
Posted on May 22, 2012 at 12:59pmMost of us here know the score. Not much more to say other than to watch it unfold in slow motion. Most of us here have friends and family who think we are unhinged because we can feel it in our bones that something bad is amiss. Bad people have been running things for a while. IMHO, JFK was the last POTUS, despite all his shortcomings, to have true affection for the American people. After that, just manipulative politicians.
We can see that the US is not alone in having rotten leaders. Europe, Asia, Africa. Not one shining star on the world stage fighting for justice. The middle east sees jihadists vying for the top echelons of political power. Where is the responsible leadership? I can honestly say I don’t see one decent man or woman holding political office on the world stage.
So it is. When men (and women) engrandize themselves and fail to honor the ONE above, what else do we expect? HIS SON lights the way for us, but we opt, instead, to rely on ourselves, and fail we will if this is our path. The only way to go is to go the path that we all know we should. And those of us who know this, but have no hands on the reins of power, just watch and prepare. This is our lot.
Report Post »brother_ed
Posted on May 22, 2012 at 12:51pmWhy would Germany want to consider mutualised bonds?
Would you want to get a loan based on your neighbors credit score?
Germany is about to get screwed and they aren’t going to be too happy!
I’m going to start telling my neighbors and family that I have been warning them for 3 years to stock up. I will not feel sorry for them if they get caught unprepared. If they come looking for food, I will consider them trespassers and we have laws against that here in Texas.
The cleanse is coming soon.
Report Post »flsnipe
Posted on May 22, 2012 at 11:59amThere is a storm a coming its name is Mutually Assured Economic Destruction. We are SCREWED!
Report Post »Ghandi was a Republican
Posted on May 22, 2012 at 11:51amThe Eurozone is collapsing now because of the severely prolonged obama recession. This has been baked in to the obama strategy.
Report Post »What was obama’s first order of business (before taking office even)? “Worst crisis ever, worse than imagined” over 1,000 times in a Month. At the time the Dow was stabilized at 9800 and had found a floor. The Dow then dropped to 6200 under obama’s fear mongering and damaging policies. This was to claim “recovery” from these pitifully low depths. This was to create crisis from the miserable feaux recovery, your local tax base being decimated, and the Global effect of it all.
Snowleopard {gallery of cat folks}
Posted on May 22, 2012 at 12:09pmAnd just as it hits the shores here at home; Obama has his dictatorship in hand.
Report Post »soybomb315
Posted on May 22, 2012 at 3:56pmGhandi would definately NOT be a republican. He would hate both parties – so would nearly every founding father with the exeption of Hamilton
Report Post »jakartaman
Posted on May 22, 2012 at 11:45amThe world is over spent over in debt.
Report Post »What we are seeing is world leaders trying to postpone the inevitable
world economic collapse. There is really only two possible outcomes.
A soft very elongated slow bleed crash that will last a minimum of 10 years.
or a very quick hard crash that will send the world into chaos.
Nobody is going to escape the pain – nobody!
johnjamison
Posted on May 22, 2012 at 12:04pmIf you have cancer do you
A-cut it out,go through chemo to destroy the cells
OR
B-Go to your local holistic medicine dealer eat herb ,place magnets on your skin and hope for the best
Countries around the world have been taking holistic for years and the cancer has continued to grow it now threatens to destroy body if the hard choices aren’t made.
Report Post »soybomb315
Posted on May 22, 2012 at 3:43pmshould have elected a doctor…. Dr. Ron Paul
Report Post »West Coast Patriot
Posted on May 22, 2012 at 5:25pmSoybomb, Good one!
Report Post »I.Gaspar
Posted on May 22, 2012 at 11:42amYou want to guarantee it 110%?
Report Post »Just vote nobama back in come November….he will guarantee our doom .
Can’t wait to see the libidiots when the shtf….
LadyLibertykicksASS
Posted on May 22, 2012 at 11:38amGET READY…….It’s Coming to America !!!!!! Stock up on food, water, protection!!!!!
Report Post »NOBALONEY
Posted on May 22, 2012 at 11:38amMutually Assured Economic Destruction.
Report Post »johnjamison
Posted on May 22, 2012 at 11:51amThat only works if we do nothing. If the American people unite WE WON’T NEED THE PRODUCTS OTHERS COUNTRIES ECONOMY.
Report Post »We are a world with in ourselfs if we chose to be we have every resource needed to trive as whole without foriegn trade.
HorseCrazy
Posted on May 22, 2012 at 12:10pmit sure is mutually assured destruction. get ready everyone.
Report Post »soybomb315
Posted on May 22, 2012 at 3:47pmyeah, its either Mutually Assured Economic Destruction or Mutually Assured Socialism. Dunno which yet – kinda depends on how much balls Romney has
Report Post »MiCurmudgeon
Posted on May 22, 2012 at 11:30amLook at what Obama is heading us towards. I had to say head because no way is he a leader.
Report Post »inblack
Posted on May 22, 2012 at 11:45amDon‘t underestimate Obama’s fail.
He has made many promises to bail out Europe at our expense – Europe will surely drag us under with Obama tying the EU anvil to our neck.
Report Post »lukerw
Posted on May 22, 2012 at 11:28amYup!
Report Post »johnjamison
Posted on May 22, 2012 at 11:37amAnd maybe it should,the only way to build an economic model that works is to allow the current one to fail by not bailing out country‘s whose have over spent and over promised its’ public workers and citizens it will force them to BE ADULTS AND MAKE THE TOUGH DECISIONS THEY KEEP PUTTING OFF.
Report Post »cemerius
Posted on May 22, 2012 at 11:24amSo, will this mean the Euro which has been inflated for years to the dollar will finally adjust to WHAT it’s true value is? As for China’s “growth” I will never trust any statistics coming from the state run country!!!
Report Post »johnjamison
Posted on May 22, 2012 at 11:38amyup
Report Post »Cavallo
Posted on May 22, 2012 at 11:53amThose growth percentages (for China) seem rather large.
Report Post »