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Euro Zone Crisis: Unemployment At Record High

Euro Zone Crisis: Unemployment At Record High

Unemployment in the 17-nation euro zone rose to a record high in May to 11.1 percent up from 11.0 percent in April, the highest since the data series started in 1995 and the highest since the euro was created in 1999. Joblessness has risen in the euro zone for the past fourteen months.

In May, 17.561 million people were unemployed, an increase of 88,000 from the previous month, says EU statistics body Eurostat. Spain’s unemployment rate, which is the highest in the EU, rose 24.6 percent in May, up from 24.3 percent.

A number of European companies including Deutsche Lufthansa AG, PSA Peugeot Citroen and Air France-KLM Group are seeking to eliminate jobs in order to lower costs as the fears over the ongoing fiscal crisis are more and more entrenched.

In the  BBC, Chris Williamson, chief economist at data provider Markit: “Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years.” A separate report, the manufacturing Purchasing Managers’ Index (PMI), showed manufacturing declining in June, for the eleventh straight month.

Mark Miller, an economist at Capital Economics Ltd. in London, in Bloomberg, described the “overall picture” as “worrying, as problems in the real economy are being compounded by problems in financial markets…. It’s very difficult to see an immediate end to this.”

Euro Zone in a Recession?

Holger Schmieding, chief economist at Berenberg Bank in London, said simply in the New York Times that “the data show the euro zone is in a recession.” Schmieding also said that the European Central Bank (ECB) must “step up and do its part” at a policy council on Thursday.

But it is also up to European leaders to act to resolve the euro zone debt crisis, which has dragged on since December of 2009. Mario Draghi, the ECB president, had said on May 31 that the bank is reaching the limits of its powers to address the crisis.

Last Friday, after a night of negotiations at the euro zone summit, politicians announced that bailout funds could be used to recapitalize struggling banks, rather than the funds going first to governments and driving up their debt. European leaders also initiated steps to create a unified banking regulator for the euro zone to “break the link between worries about banks and sovereign finances.”

The need for European politicians to act only grows as what the New York Times calls a “vicious cycle in which reduced government outlays contribute to declining growth, government revenue falls further, generating new pressure to cut spending” is already imminent.

 

 

Related Care2 Coverage

Euro Zone Crisis: Italy Wins, Germany’s Out

Euro Zone Crisis: No More Merkozy At Day 1 of Summit

Euro Zone Crisis: Why Put a Dog “In Charge of the Sausages”?

 

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24 comments

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5:33PM PDT on Jul 7, 2012

Economics 101 You cannot have a single currency and different fiscal policies. One reason the Euro is screwed and Europe in economics woes.

10:44AM PDT on Jul 3, 2012

@Sandy E. Not sure about others , but any considered thought you might wish to express will be welcomed when it occurs.

All CAPS messages screaming but bumper sticker slogans is a poor substitute for the considered thought hoped for in opinions expressed from any camp.

9:26AM PDT on Jul 3, 2012

Obama is working on this for America! DO NOT RE-ELECT OBAMA! YES IT WAS OBAMA THAT DOUBLED THE NATIOAL DEBT!

8:31AM PDT on Jul 3, 2012

The crisis is global and and much deeper and more serious than in 1929. Those who organized it knew very well what they were doing. For them a crisis is merely a chance to get rich quickly. It is also fairly obvious at whose expense and how. By ripping off and ruining the last pockets of the middle class in Western Europe and the US. They had ruined the middle class in South America in the 80-ies, in Eastern Europe in the 1990-ies now it's turn to finish off the middle class in the West. This nightmare can't be stopped with a revolution and bloodshed, I am afraid.

8:05AM PDT on Jul 3, 2012

@Miranda L. You are correct. Being that ~4 companies own nearly all the media and are part of that corporate country club, it is not surprising that news is packaged and manipulated to give a certain impression and obscure the fact that these various issues are at the core one large global issue.

That certain political party as well is tasked with labeling victims as the problem as opposed to the realty being global corporate entitlements.

7:43AM PDT on Jul 3, 2012

@Elaine A. The crisis in Europe has very little to do with socialism and very much to do with capitalism and neoliberalism (which, by the way, is killing socialism). Much of what we're living now is the direct result of the austerity measures which are supposed to solve the problem and instead are only making it worse (and then our politicians say they weren't expecting such high unemployment rates).

Mind you, those figures are the official ones. The real unemployment numbers are a lot higher. Those numbers don't account for those who have given up on looking for a job and therefore are not part of the statistics (and they are a lot of people). They also don't account for those people who do have a job but an extremely underpaid one, with no stability whatsoever. Our socialist model is at risk, yes, there are cuts every single day (on healthcare, on pensions, on unemployment benefits, etc, etc) but the only people who really suffer are those who already have very little and the middle class, which is disappearing.

7:07AM PDT on Jul 3, 2012

Thank you for the article...

4:46AM PDT on Jul 3, 2012

I'm sure it is all a part of our banker overlord's plan! Time to devise a better system than the current pyramid shaped form of capitalism! It sucks!

4:28AM PDT on Jul 3, 2012

The Eu was a stupid idea in the first place each country had its own government and they actually governed not like now they have to check with Merkel and the germans before doing anything whether its wiping their arses or some thing really important. We had two world wars to stop the germans running the whole of Europe and now thanks to various politicians we have been sold down the river and germany has won!!! I believe that it will not improve until everyone leaves the EU and tells Schmerkel to get lost!!

5:38PM PDT on Jul 2, 2012

@Elaine A. Supporting the general welfare is really not the underlying cause of the global economic issues. It is the unconstrained exploitation of capitalism , not socialism that produced bank bailouts , mortgage meltdowns and the like.

Remember , the same country club that got the bailouts also has as members the ~4 companies that own nearly all the media outlets in the US, and probably many in the rest of the world.

If one reads the WSJ or watches much of TV one is but listening to the same Rupert Murdoch
media empire. In Europe it is much the same.

This is a game played upon a global scale and the sooner folks are able to understand that their local politics mean almost nothing and adopt some global vision the better chance they have of seeing things for what they are.

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