By Jack Ewing

The euro zone is hurtling back into recession, economists declared after official figures this week portrayed a shrinking economy. But by some measures the downturn has been under way for years.

With the exception of Germany, none of Europe’s biggest economies have returned to the level of economic output they had at the beginning of 2008, before the subprime mortgage crisis in the United States spread across the Atlantic, according to calculations by two U.S. economists, Peter Rupert and Thomas F. Cooley.

The figures suggest that Europe is already well into what could become a lost decade — a period of pernicious stagnation and wasted potential that could have lasting effects on ordinary citizens.

Economic growth not realized represents investments in education that were never made, research that was never financed, businesses that failed and careers that ended too early or never got off the ground.

“There are larger implications that people don’t think about,” said Mr. Rupert, a professor of economics at the University of California, Santa Barbara. “There is a huge decline in human capital.”

Just what marks the beginning and end of a recession is not always easy to define. One common definition is two consecutive quarters of falling output. By that standard, the euro zone is technically not yet in a recession. Read more…

As published in www.nytimes.com on August 16, 2012 (a version of this news analysis appeared in print on August 17, 2012, on page B1 of the New York edition with the headline: For Europe’s Tepid Economy, a Lost Decade Looms).


www.warafterwar.com August 24, 2012 - 4:35 pm

I like this post, but I think also that Europe should wonder if economic growth should pass just through the usual links, as empowerment of building societies and finance, or also taking into account another perspective of deveolpment. Surely we live in a complex World, and I’m not talking about coming back to live in the jungles, but of course this crisis could also a chance to re-think our development.

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