Euro-Zone Unemployment Strikes Record
October 31, 2012
FROM THE WALL STREET JOURNAL
Dr. Pinna says…
What we are seeing in Europe is a new brand of Communism.
Instead of one government declaring that all people are equal,
we have 350 million people telling each other “Our currency, the Euro, makes
us all equal.”
Wherever the Euro is used, the prices are the same.
A coffee in Austria, a wealthy country, costs Four Euros and a
coffee in Greece, a poor country, costs the same: Four Euros.
However, as in all communist countries, the people see through the
The people with Euros are not buying from the poor countries.
Greeks are not selling their coffees, Spain is not
selling their paellas, Italy is not selling its pizza.
Since the purchasing power of the Euro is high, it is leaving Europe
and buying goods on the world market, especially the Asian market.
This is producing unemployment throughout Europe, but especially
in the weak southern countries which specialize in tourism and food
products which are readily available in lower cost countries.
Unemployment is a manifestation of sellers who cannot attract
buyers for goods or services.
Since the Euro is a world currency, it is leaving Europe and
its sellers of goods and services.
The Europeans have the option of remaining with a world
currency and suffering massive unemployment, or going back
to local currencies and competing with the rest of the world.
Since competition is a painful process which requires hard
work, they will remain with their world currency until the
pangs of starvation force them to change their attitude and
ARTICLE FROM THE WALL STREET JOURNAL
The number of people out of work in the euro zone climbed to another record high in September, the latest evidence of the damage the region’s long-running fiscal crisis is doing to the real economy as governments cut spending to try to control their debts.
Eurostat, the European Union’s official statistics agency, said Wednesday that 18.49 million people were unemployed in the euro zone in September, after 146,000 more people lost their jobs during the month. The total is the highest on record for the 17 nations that now use the euro, based on data going back to 1995. The rise put the jobless rate at 11.6% of the workforce, up from 11.5% in August and the highest on record.
The southern countries at the heart of the debt crisis reported the highest jobless rates, reflecting steep falls in economic activity as governments, consumers and businesses have all cut spending. Unemployment in Greece and Spain exceeded a quarter of those eligible to work in September, and accounted for more than half of the workforce aged under 25.
For the euro zone as a whole, the youth unemployment rate climbed to 23.3%, another record.
High levels of unemployment—particularly among the young—have fueled unrest in many of the countries where governments are pushing through austerity, with strikes and demonstrations particularly prominent in Greece and Spain. Anger among voters can undermine government efforts to shore up public finances, while reduced tax revenues and higher welfare payouts can also push debts higher in the near term.
Hans Leentjes, Executive Vice President at recruitment group Manpower, said young people who are unemployed now may find it very difficult to rejoin the labor market as they miss out on learning skills they need to gain employment.
“We’re at risk of creating a lost generation which could affect the economy in the longer term,” Mr. Leentjes said in an interview.
A slowdown in inflation in October could ease household finances and clear the way for the European Central Bank to intervene to support the economy, if the growth in consumer prices continues to slow as the bank expects.
Eurostat said Wednesday the annual rate of consumer price inflation in the euro zone was 2.5% in October, according to a preliminary estimate, down from 2.6% in September. The slowdown reflected a fall in energy-price inflation following a surge in fuel costs over the summer.
That impact is likely to wane further next year, pushing the overall inflation rate below the ECB’s target rate of a little below 2%, the bank’s President Mario Draghi said earlier this month. Many private-sector economists have a similar forecast, and say the ECB will probably ignore the current above-target inflation rate when deciding whether to boost the economy through interest-rate cuts or other forms of stimulus such as loans to banks.
“On its own, the current high level of inflation should not stop the ECB from adopting additional measures to support the economy either next week or soon after,” said Ben May, economist at Capital Economics, a consultancy.
The ECB’s Governing Council next meets Nov. 8 to make decisions on policies including its key interest rate, which is currently a record-low 0.75%.
The September unemployment data underscored the gulf between stronger and weaker nations within the euro zone. While joblessness climbed in many of the southern economies it was stable in Germany, Belgium and Finland and fell in Austria. Germany’s unemployment rate of 5.4% is just over a fifth of that in Spain.
But there are signs of worsening conditions in some of the so-called “core” economies. Wednesday’s data showed French and Dutch unemployment rising. Car maker Ford Motor Co. F -0.29%announced last week the closure of a major plant in Belgium with the loss of more than 4,000 jobs.
France’s statistics agency Insee said Wednesday that consumer spending in Europe’s second-largest economy rose only 0.1% in September from August, dented by zero growth in spending on clothes and a fall in spending on automobiles. Consumer spending is the main driver of growth in France.
The weak rise in September in France compared with a sharp 1.5% increase in Germany, the strongest since July 2011, as reported by the Federal Statistics office. Difficult conditions endured by retailers including Metro AG MEO.XE +1.89%suggest the strength in the official figures may not persist, however.
France’s Finance Minister Pierre Moscovici said in a television interview on BFMTV Wednesday that economic growth in France in the third quarter of this year could be “very slightly positive,” which would be the first expansion registered in the economy since the third quarter of last year.
Insee, however, forecast earlier this month that the economy would continue to post zero quarter-on-quarter growth through to the end of the year.