The news just keeps getting worse over there.
They are unlikely to make up for lost exports with domestic demand due to structural constraints on proactive fiscal policy.
This put deflationary forces in place that drive relative prices down until exports resume.
And with national government solvency in question, there is no ‘safe haven’ for euro financial assets.
Overly tight fiscal currency keeps it strong, but a reduction in the desire to save in that currency works the other way.
|European Exports Drop Most in Eight Years as Downturn Deepens|
|Trichet Denies ECB Will Cut Rates to Zero Percent, NHK Says|
|Trichet Vision Unravels as Italy, Spain Debt Shunned|
|German Government Sees 250,000 More Jobless in 2009, FAZ Says|
|German Union Chief Sommer Says New Pay Deals Will Mirror Crisis|
|German Economy May Shrink 2.5% in 2009|
|French Business Confidence Index Falls to 21-Year Low|
|France’s Woerth Says 2009 Deficit to Widen on Lower Tax Revenue|
|France Cuts Tax-Free Savings Rate to 2.5% as Inflation Slows|
|Italian Economy Will Shrink Most Since 1975, Central Bank Says|
|Italy’s Tremonti Says Further Stimulus Packages Are Pointless|
|European Government Bonds Drop; Stock Rally Saps Safety Demand|