Thursday, 26 January 2012
Saunders: the Japan scenario is way too good for Europe, it is worse than the thirties
Yesterday Michael Saunders of Citi spouted out about the macro fundamentals. He was not pessimistic about the US, but for Europe he is very negative. -1.5% growth for Europe (including Germany) in 2012 and in 2013 the recession will continue (-0.4%). In the US fiscal austerity will depress growth in 2013.
He showed several charts about how several countries in Reinhart-Rogoff style recovered after getting in a deep financial crisis. You see that Japan did very well and the US is also doing reasonably well.
In Europe they have to thank God on bended knees to get economic growth as high as in Japan after 1990. Because of the credit crisis at least 10% growth is definitely lost and there will be no end to the sufferings of Europe in the coming years because there has not yet made any progress in the deleveraging of banks, private sector, the healing of the housing markets while government debts are exploding over sustainable levels in many countries.