Whether the recession in Europe will be mild or deeper seems to be a big question at the moment. The lack of confidence in the eurozone is a big problem and coordinating a policy across the entire region is no easy task. Any chance those who insisted on a 25 nation eurozone have regrets today?
Here in France, there are plenty of "on the ground" signs that people are concerned. Friends in good jobs are being extra cautious with holiday spending and compared to the US, people really don't spend a lot over Christmas to begin with. The normal pre-holiday sales of food and wine have left a lot of products on shelf despite this being one area where the French usually spend over the holidays. Over the weekend I popped into a local mall to grab something and was surprised at how few shoppers were around. The idea of Black Friday doesn't exist here, but going straight to the checkout counter without a line is not normal for this season.
Europe may finally start experiencing what the US has been going through since 2008. It is not likely to be as deep and people are much more protected, but it still is not going to be pleasant.
The OECD said many key questions about the euro zone's response to the debt crisis remain unresolved, raising doubts about even the bloc's most solid economies, as demonstrated by Germany's difficulties placing bonds with investors last week.
"What we see now is contagion rising and hitting probably Germany as well," OECD chief economist Pier Carlo Padoan told Reuters in an interview.
"So the first thing, the absolute priority, is to stop that and in the immediate the only actor that can do that is the ECB," he added, urging the central bank to commit to a creating a cap on government bond yields as a way of calming the crisis.
