Dam breaks in Europe as deflation fears wash over ECB rhetoric – Ambrose Evans-Pritchard – Telegraph

This is an excellent article from Ambrose Evans-Pritchard, published in the Telegraph. Check it out!

via Dam breaks in Europe as deflation fears wash over ECB rhetoric – Telegraph.

The article, once again, highlights that austerity will not be enough to reverse the Eurozone’s debt crisis. Now the focus is on big players, like France and Italy, where the outlook is increasingly bleak. Because of Germany, the ECB is unable to act like a proper central bank (like the Fed, BoE, BoJ, or even the BoI).

Personally, I would expect to see speculators returning in a big way, probably leading to another Euro crisis. The leaves two residual scenarios:

  1. German reflates; Germany agrees to fiscal flexibility for the likes of France, in exchange for hard reforms; and the ECB introduces full scale QE (quantitative easing); or
  2. Break-up of the Euro, with risk of deep economic depression in many European countries, before recovery after several years of enormous pain.

Either way, politically, the EU must change.

Thoughts?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: