However, nothing was done to actually solve the problems of Europe's excessive deficits, over leveraged banking system, and slowing economies. The austerity measures being taken across Europe are not sufficient to balance budgets and will depress economic activity. The crisis will worsen in 2012.
The economic statistics coming out of Europe are starting to feature a more negative tone. As an example, the number of people in France actively looking for work at the end of November rose by 29,900, or 1.1 percent, to 2,844,800, according to a 12/26 Labor Ministry statement. That’s the highest total since November 1999. The number of jobless climbed 5.2 percent from a year earlier.
The statistics being released now are backward looking. They do not provide an indication of the impact of the recent increases in the price of oil and the potentially investment killing impact of the deluge of news about the debt crisis and coming austerity measures. My perception is that results for December and January will show serious declines in economic activity.
The continued drumbeat of bad news will be provided by the following:
- Credit rating agency downgrades
- Banking system problems
- Higher interest rates required to fund sovereign debt
- Economic statistics
- Social unrest and strikes
- The collapsing economy in Greece
Will European Voters and Strikers Derail The New Treaty's Austerity Plans?