At this point, the troubled Eurozone has endured two years of policy fixes from Brussels. The net result? Sick countries are even sicker, and the formerly healthy countries are starting to sneeze and sniffle. On the weight of the threat of Greece’s exit from the euro and the cost of seemingly endless bailouts, Moody’s has lowered its outlook to negative for three formerly triple-A countries: Germany, Netherlands and Luxembourg.
Brussels’ answer to this problem? More wishful thinking, as the Financial Times reports:
Jean-Claude Juncker, the Luxembourg prime minister who heads the group of eurozone finance ministers, attempted to calm the waters ahead of Tuesday’s market opening, issuing a statement noting the Moody’s warning also confirmed “the very strong rating” of Germany and its fellow eurozone triple-As.
The slow-motion Euro train wreck is now without doubt the biggest economic policy failure since the 1930s.
And meanwhile, over the Channel, the UK has had some bad news. GDP results were even worse than the gloomy forecasts predicted, and the UK is mired in a significant recession. The weak euro and the sickly state of the EU generally (the UK’s largest single market) were part of the problem, but it’s also clear that the UK suffers from serious problems of its own. The Olympics may provide a temporary psychological and economic boost (London hotels haven’t been this full since Charles married Di), but when the festivals are over, the coalition government faces some hard times.
Club Med is sick unto death and the North Shore is looking sickly and pale. There’s not much to cheer about in Europe today.