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More signs of the Great Depression of 2005
A large increase in oil prices has always led to a recession and this time will be no different. When you factor in the Kyoto tax, cyclical factors - there has been a long run of good times - and the China factor, the recession will be severe in Europe and ripple across the globe.Business confidence in Germany, Europe's largest economy, unexpectedly fell to an 18-month low in March as oil prices surged to a record and the euro's increase against the dollar weighed on exporters. The Ifo institute in Munich said today its business confidence index fell to 94, the lowest since September 2003, from a revised 95.4 in February. Economists expected an unchanged reading, the median forecast of 43 economists in a Bloomberg survey showed. The euro and European stocks dropped. ``The increase in oil prices and the appreciation of the euro are basically eating up the modest recovery that is gradually emerging,'' said Lorenzo Codogno, co-head of European economics at Bank of America in London. ``If this continues, it could result in another sluggish growth performance this year.'' A 35 percent increase in oil prices this year is imposing additional costs on companies already squeezed by a slump in consumer spending amid the highest unemployment since World War II. Further dimming the outlook, a 9 percent appreciation in the euro against the dollar in the past seven months is making German goods more expensive on markets tied to the U.S. currency. Posted by: phil_b 2005-03-23 |
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