Eurozone in ruins

2013 may be remembered as the year when faith in the Eurozone experiment finally returned, after a hiatus of several years. Beginning with the 2008 financial crisis, it seemed as though every economic malaise that hit the United States hit Europe even harder. Beginning with Greece, one country after another fell into a debt crisis, or a banking crisis. Sometimes it seemed that only the fiscally sound Germany was holding Europe together, and many predicted that Germany's leader, Angela Merkel, would push to dissolve the European Union.

Still, in 2013, things were looking up. Consider the chart below, with data taken from the OECD.

It looks like just about every nation in Europe is back on track, or would, if this were more than an estimate. A far starker picture was presented today by Matt O'Brien of the Wall Street Journal , who argues that Europe's recession is actually a depression and that it is - or very soon will be - worse than the 1930s depression.

Based on the chart provided, it is fair to say that Europe's current economic doldrums will soon be longer lasting than the 1930s depression, though they clearly never approached the same level of severity. Depending on how you look at it, the claim might be a trifle overstated. But even if that is so, things are bad in Europe, and the faith that was tentatively reborn in 2013 is now very likely dead for good.

O'Brien argues that bound as they are to a monetary standard beyond their control, Europe's modern states are prevented from engaging in the Keynesian economics that could lift them out of their economic slide, just as many countries were constrained from doing so by their gold standards in the 1930s. He also argues that the "eurocrats" who put the Eurozone together will never let go of their experiment. All told, it's a sobering analysis, offering nothing by way of a silver lining.

If there is good news to be gleaned from this, from the perspective of the US, it is this: thusfar, we have really only flirted with austerity, never consummating the relationship as Europe did. If experience has anything to say to ideology, we'll realize now that we never should.

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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