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“The world economy is not in good shape. [...] But the biggest economic threat, by far, comes from continental Europe”, writes The Economist. The magazine’s cover refers to the infamous Monty Python “Parrot sketch”, with German chancellor Angela Merkel stating that the bird is not really dead.
The problem with European economy is that the eurozone is on the verge of deflation, writes the economic weekly. To counter it, Europe “will have to stop its self-destructive behaviour”, and for that “something radical is needed” —
The best legal option is to couple a dramatic increase in infrastructure spending with bond-buying by the ECB [European Central Bank]. [...] Another possibility would be to redefine the EU’s deficit rules to exclude investment spending, which would allow governments to run bigger deficits, again with the ECB providing a backstop. Behind all this sits a problem of political will. Mrs Merkel and the Germans seem prepared to take action only when the single currency is on the verge of catastrophe.
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