The BBC news website currently carries this interesting article. Blame seems to be being laid at the feet of Brent Crude oil, who's prices have been in decline since early December. They are currently at a five-year low seemingly caused by Saudi Arabia cutting their prices to Europe whilst increasing them for Asian customers. Do you think this development will have nay further impact on the market? http://www.bbc.co.uk/news/business-30693901
Doom and Gloom article Things are not great now, but please bold the part where it says ´18 months of continuous growth´. That is a winning situation and add to it that there is no inflation.
No inflation?! Maybe that is what their statistics show... the price of everyday goods seems to disagree. Though it has been a bit better now than it was in 2013 for example. But I still fail to see how everyone is now saying that oil going low is bad. People just always read these "doomsday" news so reporters keep writing them. When oil was high it was slowing down the economy. Now when it dropped... it's going to crash the economy? Logic anyone? While this certainly isn't great for oil producing companies, it will significantly lower the production costs of almost every other type of industry. Even if they don't use oil in any part of the manufacturing process they will still save a lot in transportation costs. Couple cheaper production with increased people having more money to spend since they spend less on fuel for their car... I just see that as 2 big positives for around 95% of the industries... and yet somehow this is supposed to slow down economy?
What I've been noticing is that the dollar keeps rising comparing to the Euro, but this doesn't mean that the European economy is weaker does it? I do notice that our wages don't grow and that unemployment is not smaller...
there are a lot of things that affect the USD/EUR. But yeah, the weak European economy is one of the major reasons for the weakening of the euro. (weak euro -> better for european companies which export items to the outside of the euro zone)
That is a fact, if the euro is worth less the companies exporting are making more money when they sell, so that's a way to boost the economy as well.
I'm thinking it's not just the drop in oil prices that will slow down Eurozone's economy. There are other factors which they'd rather not talk about. The Russian sanctions for instance? What happened when Russia banned imports from the EU? Oil may be given as the reason for the Eurozone's economic woes because the EU is unwilling to admit that they made a mistake sanctioning Russia. They didn't expect the lashback.
This is what I hate about these types of articles. They say Doom, and then they give their reasons. Then everyone else debates different reasons.. and nobody actually looks at the data and sees that things aren´t that bad. 18 months of growth. Economies can always be better, and you can always talk about weakness in different sectors and stuff like that. But overall if the economy is growing slowly, that is the best situation because you have growth without inflation fears.
Europe is basically structurally weak. I don't think it's simply a cyclical issue. The eurozone crisis simply showed up the inefficiencies that a number of countries brought into the euro project. The fact that the likes of Italy, Spain and Greece continue to struggle means that the broader European story will remain the same until there is some real tough love implemented in policy.
Yes, some tough love is needed. Look at Iceland.. they let all the poorly managed banks run bankrupt. The government then bought parts of them just so they could keep the everyday services (bank transfers, atm's, credit cards) etc working. They basically got rid of all the filth once and forall. What the EU is doing now is just encouraging banks to be stupid. Why should banks invest in a safe and controlled manner when they can risk it all in hopes of high profits and should the brown matter hit the fan, they know that the government will throw in tax payers money to save the banks. And it's the same on a larger scale too. Governments are not willing to cut spending because they know that should there be trouble, the richer countries will be almost forced to help them.