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Stalled recovery leaves Europe defenceless against economic shock from Russia

OWoN: Germany is ring fenced and choking in debt from this rotten and corrupt European Union. Britain needs to leave NOW.

As I wrote yesterday Germany is leaving, it will drop the Euro and join the BRIC block as quickly as it can. Perhaps it will be not tool late for them.

What this will do to the rest of Europe remains to be seen. And this could take place as early as September.


Europeans have created a currency structure that is not only prone to chronic depression and serial crises, but has also left them incapable of responding to a geopolitical threat of the first order - Photo: Reuters

Stagnation is automatically causing debt ratios to spiral upwards yet again across a large part of the currency bloc

The Telegraph
By Ambrose Evans-Pritchard
23 July 2014

Europe's economic recovery has stalled. The EMU policy elites took a fateful gamble that global growth alone would lift the eurozone off the reefs, without the need for serious monetary stimulus or a reflation package to ensure take-off velocity.

Their strategy has failed. The Bundesbank says German growth may have slumped to zero in the second quarter. French industrial output has fallen for three months in a row. French business surveys point to an outright contraction of GDP, with a high risk of a triple-dip recession.

Stagnation is automatically causing debt ratios to spiral upwards yet again across a large part of the currency bloc. The situation is doubly delicate since the European Central Bank is no longer able to serve as a lender-of last resort for Italy, Portugal and Spain.

Germany's top court has ruled that the ECB's back-stop plan (OMT) "manifestly violates" the EU treaties, and is probably Ultra Vires. The political reality is that the OMT cannot be deployed, whatever the European Court says when it issues its own judgment long hence.

Any external economic shock at this stage risks exposing the fundamental incoherence of the EMU system, and therefore shattering the fragile truce in the markets. It is this fear - even more than worries about gas supply - that is contaminating the crisis strategy towards Russia.

Europeans have created a currency structure that is not only prone to chronic depression and serial crises, but has also left them incapable of responding to a geopolitical threat of the first order, even when it is on their doorstep.

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