With the presidential election finally in the rearview mirror, we now return to our regularly scheduled angst over the European debt crisis.
The problems in Europe have been an afterthought of late while U.S. investors waited to see who their next president will be. Not much has changed – the eurozone remains in as much turmoil as when we last cared about it.
In fact, some new developments today were especially discouraging.
In case you’ve missed it, here’s the latest on the European debt crisis:
- Europe’s sovereign debt issues have undoubtedly made their way into the continent’s largest economy. ECB president Mario Draghi warned that the German economy would grow by just 0.8% this year and in 2013 – down from previous estimates of 1.7%. Also, industrial output in the world’s fifth-largest economy fell 1.8% in September.
- Greek parliament is holding yet another austerity vote today, prompting more riots in the streets of the deeply fractured country. The austerity measures are part of a bailout package that includes substantial cuts in pensions and public-sector salaries, a bump in the retirement age from 65 to 67, higher healthcare charges, and tax increases on fuel and cigarettes. According to the Financial Times, some Greek officials worry that the austerity measures could push the nation’s unemployment rate close to 30%.
- Retail sales in the eurozone fell 0.2% in September. For the year, eurozone sales are down 0.8% compared to 2011.
- The European Commission cuts its 2013 growth forecast for the 27-nation European Union to 0.4%. That’s less than a third of its previous growth forecast of 1.3%.
Clearly, Europe’s problems aren’t going away anytime soon. Unfortunately now that the election is over, like last year those problems may again become your problems.
The spotlight is about to be turned on Europe again. Investors might not like what they see once the lights come up.