On March 28, 2013, Brad Plumer writes on Ezra Klein’s Wonkblog in The Washington Post:
A new analysis by three economists at BofA Merill Lynch Global Research finds that Europe’s major economies could be doomed to sluggish growth for many years to come.
The authors start by pointing out that countries suffering from a recession triggered by a housing bubble typically take a long time to fully recover (five-and-a-half years, on average).
In Europe’s case, however, those woes are further exacerbated by structural problems with the euro zone currency union. The continent’s banking system is still a mess and hurt by a lack of coherent regulation. Meanwhile, many nations have been enacting sharp spending cuts and tax hikes to deal with their debt troubles, dragging down growth even further.
The three economists, Laurence Boone, Céline Renucci, Ruben Segura-Cayuela, try to assess the long-term damage done by this unusually long slump. In places like Spain, where unemployment is now 26 percent, many people will be out of work for a long time, seeing their skills erode and becoming much harder to employ later on. (This is known as“hysteresis.”) What’s more, it’s still not clear whether investment will recover back to its pre-recession pace — that depends on the banks.
In the “central case,” Germany, France, Italy and Spain all grow more slowly for years to come, never catching up to their pre-recession trend growth. In the “pessimistic” case, things get even worse, with Italy’s economy continuing to shrink through 2020. In the “optimistic” case, productivity and investment return more quickly, but even then, all the countries but Germany will be below their pre-recession trend growth by the end of the decade.
“In the absence of impetus for bold reform,” the authors conclude, “this exercise shows the damage will indeed be long lasting, permanently impairing growth in a context of an aging population that needs higher growth capacity than ever before.”
The ONLY way to stimulate and sustain economic growth is to simultaneously finance new productive capital investment so that new capital owners are created who will benefit from the full earnings payout of dividend earning that will bolster their personal incomes and create “customers with money” market demand to support the purchase and does continual growth of the economy’s output in terms of needed and wanted products and services. The FUTURE economic success of nations will be determined by the extent to which they broaden the private, individual ownership of FUTURE productive capital formation, which as a result will create REAL job opportunities necessary to build a FUTURE economy that can support affluence for EVERY citizen.
As in the United States, the European consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people in the age of technological prowess. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in Europe and in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.
Providing a way of legitimately getting productive capital ownership into the hands of the people who now don’t have it is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and cause EVERY American’s income to significantly grow, providing the means to support themselves and their families with an affluent lifestyle, and provide the necessary tax base to gradually pay off American debts. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
