John Rubino says that last year the world kind of forgot about Europe. After ECB head Mario Draghi vowed to “do whatever it takes” to get the Continent growing, the markets calmed down, money got cheap and plentiful and functionally-bankrupt countries like Greece, Italy and Spain stopped making scary headlines. To the casual observer it began to look like the euro project might actually succeed.
Then the mirage evaporated. Five years into a recovery that should, if it followed the normal script, be in danger of overheating, the major eurozone countries are actually slipping back into recession. Germany and Italy clocked in with -0.2% GDP growth in the second quarter, while France was exactly zero. For countries that continue to pile new debt on top of already unsustainable mountains of old debt, zero growth isn’t stasis, it’s death. So how far can QE be?
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