Europe’s Recession

The Euro Mess remains as messy as ever. However, investors have been less concerned about a financial meltdown in Europe ever since ECB President Mario Draghi volunteered at the end of July to do whatever it takes to avert a euro cliff. Furthermore, the Europeans continue to kick Greece down the road rather than force it out of the euro zone. Nevertheless, Europe is sinking deeper into a recession. That’s becoming a more significant concern to investors I’ve talked with recently, especially if the US economy falls off the fiscal cliff.

Particularly unsettling yesterday were massive and widespread anti-austerity protests across Europe. The strikes and demonstrations, some involving hundreds of thousands of people, hit more than 20 countries in the EU, disrupting airports and ports, closing roads and public transportation, and shutting some essential services. The biggest protests were in Portugal, Spain, Greece, and Italy. The union-led protests--called "European Day of Action and Solidarity"--were mostly peaceful, but turned violent in Lisbon, Madrid, and Rome.

September was a bad month for European output. Industrial production in the euro area fell 2.5% m/m, with sharp declines in Germany (-2.1), France (-2,7), Italy (-1.5), and Spain (-5.1). During the month, there were also big drops in Greece (-9.0), Portugal (-12.0), and Ireland (-12.6). Output in the UK has been hovering around its lows of early 2009 for the past few months.

Today's Morning Briefing: Foul Mood. (1) It isn’t personal; it’s business. (2) Obama raises the ante. (3) Anti-austerity protests in Europe. (4) Friedman’s nightmare scenario for the Middle East. (5) QE4 to the rescue? (6) The market’s post-election vote is thumbs down. (7) Maybe it’s not as bad as it feels. (8) Recessions are popping up around the world. (9) There’s still growth in the US, China, Mexico, and Indonesia. (More for subscribers.)