The euro zone slipped deeper into recession in the fourth quarter of 2012, much more severely than economists had predicted.
Germany’s economy contracted 0.6%, while France’s fell 0.3%. Furthermore, France’s figures for the first and second quarters of last year were revised to negative, indicating negative growth for three of the four quarters of 2012.
This is not a minor thing. All the speeches by European politicians, all the policies by financial ministers, all the plans and budgets by analysts — all of them are based on the assumption that all the 1980s and 1990s macroeconomic models still work.
As I’ve said repeatedly, the only models that work today are the ones from the 1930s, because that was the last generational crisis era. Alan Greenspan has also pointed out that every macroeconomic model has been a failure for the last five years. Reuters