walter russell mead peter berger lilia shevtsova adam garfinkle andrew a. michta
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The Incredible Shrinking Eurozone

All of the major countries of the Eurozone, Germany included, posted losses in the fourth quarter of 2012 as the continent slides deeper into recession. This marks the third consecutive quarter in which the European economy shrank, as Reuters reports:

Germany contracted by 0.6 percent on the quarter, official data showed, marking its worst performance since the global financial crisis was raging in 2009.

France’s 0.3 percent fall was also slightly worse than expectations.

Worryingly for Berlin, it was export performance—the motor of its economy—that did most of the damage, declining significantly more than imports, although economists expect it to bounce back quickly.

This time Germany is the weak link in the eurozone. It’s shrinking faster than France—though revisions to past numbers show that France has been spinning its wheels since the start of 2012.

As we’ve noted here before, the ECB’s open-ended support for debt-strapped governments like Greece, Italy, and Spain has papered over the euro crisis, but the underlying problems that caused it persist. Europe is now paying the price.

With Japan also in negative growth territory and the U.S. skating just above it with minuscule growth in Q4 2012, the global economy is now in as worse a shape as it has been since the great meltdown of 2008.

The world economy remains sickly, and the doctors don’t know what to do.

[Image courtesy of Shutterstock.com]

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