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The Eurozone Is Ruining Everything

Here's the latest impressively awful bit of data to emerge from the economic wasteland at the heart of the world's economic slag-heap, Europe: Employment in the eurozone has dropped to a seven-year low.
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Here's the latest impressively awful bit of data to emerge from the economic wasteland at the heart of the world's economic slag-heap, Europe: Employment in the eurozone has dropped to a seven-year low.

Eurostat, the EU's official statistics agency, said on Thursday that employment in the 17 countries that use the euro fell 0.3% in the fourth quarter from the third, to 145.7 million in seasonally adjusted terms.

That is the lowest number since the first quarter of 2006. In the previous quarter, employment fell 0.1%.

Europe's leaders, who are beginning to bear a startling resemblance to U.S. leaders in terms of indecision and—when that subsides—bad decision-making, are meeting now to fight over whether austerity's failure simply requires more austerity, or whether something should be done about all of those people out of work before they take up arms. All of which is making the Swiss very nervous, indeed.

The Swiss central bank pledged to keep up its defense of the franc cap after almost doubling its currency holdings to shield the country from the fallout caused by the euro zone’s crisis….

Jordan said in a newspaper interview on Feb. 27 that an exit from the cap was still far off given that the euro-zone crisis could flare up again. He today confirmed that assessment.

“Downside risks to the Swiss economy remain considerable,” Jordan said in Aarau. “There is a risk that tensions in the euro area will increase again.”

All of which has the dollar feeling positive frothy, rising to better than two-year high this week as our anemic recovery compares rather favorably to no recovery at all. This, of course, carries risks.

Economists say the dollar hasn't risen enough yet to pose a serious threat to the U.S. recovery. But the stronger dollar is starting to show up in corporate earnings, as companies find overseas profits are worth less when translated into U.S. currency. Tourists are seeing their cash stretch a little further on vacation abroad, while U.S. destinations may see fewer British and Japanese visitors with the pound and yen in steep decline.

Meanwhile, there's some less-equivocally goodnews about the U.S. economy, as well.

The current-account deficit in the U.S. unexpectedly narrowed in the fourth quarter, helped by a the biggest surplus on income in a year.

The gap, the broadest measure of international trade because it includes income payments and government transfers, shrank 1.8 percent to $110.4 billion from a revised $112.4 billion shortfall in the prior quarter, a Commerce Department report showed today in Washington. The median forecast of economists in a Bloomberg survey called for a $112.5 billion deficit in the final three months of 2012.

The number of U.S. properties with foreclosure filings fell 25% in February from a year earlier as U.S. bank reposessions dropped to a 65-month low, according to market researcher RealtyTrac.

"At a high level the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years," said Vice President Daren Blomquist. "But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system."

Euro-Zone Employment Hits Low of Nearly Seven Years [WSJ]
SNB Keeps Up Franc Defense as Euro Crisis Risks Persist [Bloomberg]
The Almighty Dollar Is Back [WSJ]
Current-Account Deficit in U.S. Narrowed 1.8% in Fourth Quarter [Bloomberg]
U.S. Foreclosure Filings Fall 25% in February [Dow Jones via Nasdaq]


By de:User:Tower of Orthanc [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

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