What is happening with the European economy? Half of it in depression per this? What do you think?

http://www.gata.org/node/7098





Ambrose Evans-Pritchard: Monetary union puts half of Europe in depression


Submitted by cpowell on Sat, 2009-01-17 20:18. Section: Daily Dispatches


By Ambrose Evans-Pritchard


The Telegraph, London


Saturday, January 17, 2009





http://www.telegraph.co.uk/finance/comme鈥?/a>





Events are moving fast in Europe. The worst riots since the fall of Communism have swept the Baltics and the south Balkans. An incipient crisis is taking shape in the Club Med bond markets. S%26amp;P has cut Greek debt to near junk. Spanish, Portuguese, and Irish bonds are on negative watch.





Dublin has nationalised Anglo Irish Bank with its half-built folly on North Wall Quay and E73 billion (L65 billion) of liabilities, moving a step nearer the line where markets probe the solvency of the Irish state.





A great ring of EU states stretching from Eastern Europe down across Mare Nostrum to the Celtic fringe are either in a 1930s depression already or soon will be. Greece's social fabric is unravelling before the pain begins, which bodes ill.





Each is a victim of ill-judged economic policies foisted upon them by elites in thrall to Europe's monetary project -- either in the European Monetary Union or preparing to join -- and each is trapped.





As UKIP leader Nigel Farage put it in a rare voice of dissent at the euro's 10th birthday triumph in Strasbourg, EMU-land has become a Volker-Kerker -- a "prison of nations," to borrow from the Austro-Hungarian Empire.





This week, Riga's cobbled streets became a war zone. Protesters armed with blocks of ice smashed up Latvia's finance ministry. Hundreds tried to force their way into the legislature, enraged by austerity cuts.





"Trust in the state's authority and officials has fallen catastrophically," said President Valdis Zatlers,


who called for the dissolution of parliament.





In Lithuania, riot police fired rubber-bullets on a trade union march. Dogs chased stragglers into the Vilnia river. A demonstration outside Bulgaria's parliament in Sofia turned violent on Wednesday.





These three states are all members of the Exchange Rate Mechanism (ERM2), the euro's pre-detention cell. They must join. It is written into their EU contracts.





The result of subjecting ex-Soviet catch-up economies to the monetary regime of the leaden West has been massive overheating. Latvia's current account deficit hit 26 percent of GDP. Riga property prices surpassed Berlin.





The inevitable bust is proving epic. Latvia's property group Balsts says Riga flat prices have fallen 56 percent since mid-2007. The economy contracted 18 percent annualised over the last six months.





Leaked documents reveal -- despite a blizzard of lies by EU and Latvian officials -- that the International Monetary Fund called for devaluation as part of a E7.5 billion joint rescue for Latvia. Such adjustments are crucial in IMF deals. They allow countries to claw their way back to health without suffering perma-slump.





This was blocked by Brussels -- purportedly because mortgage debt in euros and Swiss francs precluded that option. IMF documents dispute this. A society is being sacrificed on the altar of the EMU project.





Latvians have company. Dublin expects Ireland's economy to contract 4 percent this year. The deficit will reach 12 percent of GDP by 2010 on current policies. "This is not sustainable," said the treasury. Hence the draconian wage deflation now threatened by the Taoiseach.





The Celtic Tiger has faced the test bravely. No government in Europe has been so honest. It is a tragedy that sterling's crash should have compounded their woes at this moment. To cap it all, Dell is decamping to Poland with 4 percent of GDP. Irish wages crept too high during the heady years when Euroland interest rates of 2 percent so beguiled the nation.





Spain lost a million jobs in 2008. Madrid is bracing for 16 percent unemployment by year's end.





Private economists fear 25 percent before it is over. Spain's wage inflation has priced the workforce out of Europe's markets. EMU logic is wage deflation for year after year. With Spain's high debt levels, this is impossible.





Either Mr Zapatero stops the madness, or Spanish democracy will stop him. The left wing of his PSOE party is already peeling off, just as the French left is peeling off to fight "l'euro dictature capitaliste."





Italy's treasury awaits each bond auction with dread, wondering if can offload E200 billion of debt this year. Spreads reached a fresh post-EMU high of 149 last week. The debt compound noose is tightening around Rome's throat. Italian journalists have begun to talk of Europe's "Tequila Crisis" -- a new twist.





They mean that capital flight from Club Med could set off an unstoppable process.





Mexico's Tequila drama in 1994 was triggered by a combination of the Chiapas uprising, a current account haemorrhage, and bond jitters. The dollar-peso peg snapped when elites bega|||Several months ago, I told my friend that I have a feeling the Irish Economy will collapse. Their great gains came from borrowing from their heavy borrowing of the EU. I told him when the wind change, the Irish would be disproportionately hurt by their huge debt. I haven't heard much about what's going in Ireland, but what your describing, it's happening now. I am watching Iceland more closely, and I was told that Lithuiania is rioting, but I also heard criminal elements were part of the reason as well.|||Had I means, I'd comment.





This is unnerving.





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