Europe already has one foot in “Japanese” deflation grave:
This article, published in The Telegraph by Ambrose Evans-Pritchard, is about the European debt crisis. He presents its risks, the policy errors made by all governments and explains how close Europe already is to the dangerous deflation trap.
The author emphasises that Europe is on the edge of deflation. Most countries experience debt rise which will finally lead to deflation. Once a country, or in our case the Eurozone countries, reaches deflation it is incredibly hard for them to escape from it. This is proven by the example of Japan, a country struggling for years to reach and maintain a healthy inflation rate. In order to prevent deflation, however, the European governments would need to take on even more unpopular policies and therefore they prefer doing nothing. According to the author they will wait until the Eurozone crisis even hits the wealthier countries very hard instead of dealing with it now.
Evans-Pritchard then suggests possible solutions, admits, however, that it is not likely that they will be applied, as this would require a considerable amount of effort and courage from the governments. He concludes that Europe will eventually slither into deflation and will have a hard time escaping it again.
[200 words]
Evans-Pritchard then suggests possible solutions, admits, however, that it is not likely that they will be applied, as this would require a considerable amount of effort and courage from the governments. He concludes that Europe will eventually slither into deflation and will have a hard time escaping it again.
[200 words]
Revised Version:
This article, published in The Telegraph of October 23, 2013 by Ambrose Evans-Pritchard, treats the problem of the European debt crisis. He presents its risks, the government policy errors and explains how close Europe is to the deflation trap.
The author emphasises that Europe is on the edge of deflation. Most countries experience a debt rise which will finally lead to deflation. Once a country, or in our case the Eurozone countries, reaches deflation it is incredibly hard for them to escape. This is proven by the example of Japan, a country struggling for years to reach and maintain a healthy inflation rate. In order to prevent deflation, however, the European governments would need to take on even more unpopular policies and therefore they prefer to remain idle. According to the author they will wait until the Eurozone crisis even hits the wealthier countries very hard instead of approaching the problem now.
Evans-Pritchard then suggests possible solutions, admits, however, that it is not likely that they will be applied, as this would require a considerable amount of effort and courage from the governments. He concludes that Europe will eventually slither into deflation and will have major difficulties escaping it again.
[200 words]
Europe already has one foot in “Japanese” deflation grave:
This article, published in The Telegraph of October 23, 2013 by Ambrose Evans-Pritchard, treats the problem of the European debt crisis. He presents its risks, the government policy errors and explains how close Europe is to the deflation trap.
The author emphasises that Europe is on the edge of deflation. Most countries experience a debt rise which will finally lead to deflation. Once a country, or in our case the Eurozone countries, reaches deflation it is incredibly hard for them to escape. This is proven by the example of Japan, a country struggling for years to reach and maintain a healthy inflation rate. In order to prevent deflation, however, the European governments would need to take on even more unpopular policies and therefore they prefer to remain idle. According to the author they will wait until the Eurozone crisis even hits the wealthier countries very hard instead of approaching the problem now.
Evans-Pritchard then suggests possible solutions, admits, however, that it is not likely that they will be applied, as this would require a considerable amount of effort and courage from the governments. He concludes that Europe will eventually slither into deflation and will have major difficulties escaping it again.
[200 words]
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