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  1. #1
    Senior Member AirborneSapper7's Avatar
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    Europe's industrial base may never recover from crisis

    Europe's industrial base may never recover from crisis

    The European Commission has issued a red alert over the unprecedented collapse of industrial production, warning that EU states are running out of money for rescue packages.

    By Ambrose Evans-Pritchard
    Last Updated: 7:38AM GMT 13 Feb 2009

    Factory output plunged by a record 12pc in December year-on-year. Spain suffered the steepest fall of countries in the Eurozone with a 20pc drop. Among non-euro countries, the biggest declines were led by Latvia (-21pc), Sweden (-18pc) , and Romania (-17pc).

    "What's completely new is the extent and speed of this crisis. The credit crunch is a reality, and even member states are having trouble financing their debts," said industry commissioner Gunther Verheugen.

    "Blind activism is not going to help. EU states and the commission must not take on the role of white knights. We don't have a single euro in our budget to save companies. The financial options of the EU and member states are reaching their limits."

    Julian Callow, from Barclays Capital, said an over-valued euro had slowly "hollowed out" Europe's manufacturing core over the last two or three years. "It takes time for currency effects to feed through. The damage was concealed during the global boom but the collapse in demand has exposed the vulnerabilities. We going to see a prolonged period of de-industrialisation," he said.

    The commission said core sectors such as shipbuilding might never recover from the slump as Asian competitors lock up the next round of orders by offering "unfairly low prices". "European yards do not have the means to withstand a price war or to operate at below costs for long", it said. Europe still has 150 ship yards supporting almost 450,000 workers, and control 35pc of the global market.

    The car and truck industry are in dire straits. Orders for heavy duty vehicles collapsed from 38,000 last January to 600 in November. The report said car sales may fall a further 18pc this year, cutting output by 2.5m vehicles. This has led to knock-on effects across industries. Flat steel orders have dropped 57pc. Ominously, Europe's steel output (-19pc) is falling at twice the global rate (-10pc).

    While Daimler is still able to raise capital at a penal rate of around 9pc or 10pc, both PSA Peugeot Citroen and Renault have been unable to place bond issues. Renault said its car division had lost €873m (£783m) in the second half of 2008.

    French president Nicolas Sarkozy has come to the rescue with a €6bn package of soft loans for France's car industry, provided it promises not to fire workers or shift plant abroad.

    Brussels is examining whether this breaches EU law. Jose Barroso, the Commission's president, said it was imperative aid packages by different EU states do not degenerate into beggar-thy-neighbour protectionism.

    He said: "We will be studying aid plans to ensure that there are no harmful collateral effects in other countries. If one country takes unilateral measures, the others could do it as well. We would lose Europe's greatest resource: the single market"

    http://www.telegraph.co.uk/finance/news ... risis.html

    we havent seen the worst of it yet... what you see happening in the EU is going to intensify here
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  2. #2
    Senior Member AirborneSapper7's Avatar
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    Europe's economy contracts at rates not seen since 1930s

    Dire day for Europe as Spain's jobless blasts through 3m and German industry goes into "free-fall"

    By Ambrose Evans-Pritchard, International Business Editor
    Last Updated: 9:10AM GMT 09 Jan 2009

    European Union Monetary Affairs Commissioner Joaquin Almunia Photo: REUTERS German exports and industrial orders have both plunged at the steepest rate since modern records began and Spain's unemployment has surged above three million, capping one of the most disastrous days for Europe's economy since the Second World War.

    Joaquin Almunia, the European economics commissioner, warned that the picture would turn "dramatically worse" this year. The eurozone's confidence index collapsed from 74.9 to 67.1, the lowest since Brussels started collecting the data in 1985.

    "It makes truly dismal reading," said Julian Callow, Europe economist at Barclays Capital. "Industrial sentiment has never experienced such a rapid slump. There is an implosion of demand."

    Spain lost almost 140,000 jobs in December, pushing unemployment to 3.1m or 13.4pc. The Labour Office said the country had shed a million in jobs in 2008 as the building boom collapsed. This is equivalent to 7m job losses in the United States.

    The Labour Secretary Maravillas Rojo said she could not rule out a rise in unemployment to 4m this year. "We are in an unprecedented situation, and 2009 is going to be very difficult," she said.

    Madrid now has its hands tied under the constraints of monetary union. It cannot slash interest rates or devalue, and it has already exhausted its scope for fiscal stimulus under the EU's Stability Pact. The one piece of good news is that euribor rates used to price almost all mortgages in Spain has dropped for 61 days in a row to 2.88pc.

    Spain is now in company at last with Germany, where exports plummeted 10.6pc in November. The German economy is highly-geared to the global industrial cycle and is suddenly facing a vicious downturn as demand for machinery slumps in China, Russia, the Mid-East, and equally important as car sales crash in Italy, Spain, and Britain. The country's trade surplus has shrivelled by a third in one month.

    "Industry is in free-fall," said Dirk Schumacher, from Goldman Sachs. Germany's industrial orders have plummeted 27pc year-on-year, heralding a drastic economic contraction this year. Berlin is mulling a €100bn fund to rescue companies in distress, on top of its €50bn Keynesian blitz over two years. The fiscal package includes tax cuts and infrastructure spending. Chancellor Angela Merkel's coalition has backed away from plans to `tough out' the recession after a fierce criticism from German economists and industrial leaders.

    Berlin is now preparing the part-nationalisation of Commerzbank by taking a 25pc stake in exchange for a €10bn infusion of capital, helping to boost the bank's capital ratio as it digests Dresdner Bank. Commerzbank shares fell 14pc. France is also drawing up plans for a fresh €10.5bn capital injection for its banks.

    Jacques Cailloux, from the Royal Bank of Scotland, said the pace of contraction in Europe is now disturbingly close to levels seen in the Great Depression. The eurozone bloc shrank by 3pc in 1930, 5pc in 1931, and 4pc in 1932.

    By this count, 2009 could easily match 1930. The latest data points to 3pc contraction rate since late last year, with no improvement in sight. "Even the worst case scenarios people talked about now look too optimistic. But at least the authorities have done enough to prevent the vicious downward spiral from accelerating. We've haven't seen the sort of run on bank deposits or mass bankruptices that occurred in the 1930s. That is crucial," he said.

    Elga Bartsch from Morgan Stanley said the European Central Bank may have to cut rates to 1pc and let its overnight EONIA rate drop to zero. It has already expanded its balance by 55pcc in a quiet shift to emergency stimulus, but may now have to go further than it wants to head off a "deflation trap".

    http://www.telegraph.co.uk/finance/comm ... 1930s.html
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  3. #3
    Senior Member carolinamtnwoman's Avatar
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    Re: Europe's industrial base may never recover from crisis

    "We don't have a single euro in our budget to save companies. The financial options of the EU and member states are reaching their limits."

    Sounds like poor planning to me...somebody didn't do their homework!


    Madrid now has its hands tied under the constraints of monetary union. It cannot slash interest rates or devalue, and it has already exhausted its scope for fiscal stimulus under the EU's Stability Pact.

    The German economy is highly-geared to the global industrial cycle and is suddenly facing a vicious downturn as demand for machinery slumps in China, Russia, the Mid-East

    Jose Barroso, the Commission's president, said it was imperative aid packages by different EU states do not degenerate into beggar-thy-neighbour protectionism.

    "If one country takes unilateral measures, the others could do it as well. We would lose Europe's greatest resource: the single market."

    There's only one solution for EU countries: PROTECTIONISM!!!


  4. #4
    UserNotLoggedIn's Avatar
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    They'll recover just like we will.

    We might not have the same companies building
    stuff for us but somebody will eventually step in
    where the others failed.

    Most of us may not be working for the same companies
    or performing the same jobs but we will have jobs &
    manufacturing again sooner or later.

    This is kind of like Mother Nature renewing her
    forest lands thru a lightning strike.

    The lands come back heartier than ever.

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