“It’s a greater depression”

Now who could possibly have ever seen this coming five years ago?

Europe hasn’t recovered, because it hasn’t let itself. Too much fiscal austerity and too little monetary stimulus have, instead, put it more than halfway to a lost decade that’s already worse than the 1930s.

It’s a greater depression.

And as the latest GDP numbers show, it’s not getting any less so. Indeed, the eurozone as a whole didn’t grow at all in the second quarter. Neither did France, whose economy has actually been flat for a year now. Germany’s economy fell 0.2 percent from the previous quarter—and that after revisions revealed it had quietly gone through a double-dip recession in early 2013. Though that’s still much better than Italy: Its GDP also fell 0.2 percent, but its triple-dip recession has now wiped out all growth since 2000. The closest thing approximating good news was that Spain’s dead-cat bounce recovery continued with 0.6 percent growth. But it still has 24.5 percent unemployment.

But it’s a little misleading to just call this a depression. It’s worse than that. Europe is turning Japanese. The combination of zombie banks, a rapidly aging population and, most importantly, too-tight money have pushed it into a “lowflationary” trap that makes it hard to grow, and is even harder to escape from.

A greater depression. A Great Depression 2.0, some might say. The same is true of the USA, by the way, the main difference is that the Fed and the Administration are more able to closely collude on statistical shenanigans that disguise the fact that the U.S. economy is in a deeper depression of greater magnitude than the Great Depression of the 1930s.

Using GDP to determine whether the economy is growing or contracting is like attempting to use a map to determine if you have reached your destination without bothering to look outside to see where you are. A map written by a thief who doesn’t want you to get where you are going.