April 26, 2024

Europe Finds Slope Ahead Is Growing Ever Steeper

Greece, Ireland, Portugal and Spain are already in downturns or fighting to escape them, as high unemployment and austerity measures bite. But in the past few weeks, Germany and France, the Continent’s powerhouses, have also started to falter, hurt as struggling banks tighten their lending and orders for business from the indebted countries of Europe ebb.

“The sovereign debt crisis is like a fungus on the economy,” said Jörg Krämer, the chief economist at Commerzbank, who last week joined the growing crowd of analysts who are now predicting that Europe is headed for a recession. “I thought it would be just a slowdown, as is not unusual after a recovery. But I have changed my mind.”

The euro zone economy has already slowed to essentially no growth. It could stay in a slump, many economists say, at least through next spring. If that happens, tax revenues are likely to fall and unemployment is expected to rise, making it even more difficult for Europe to deal with the sovereign debt crisis and protect its shaky banks.

Worse, emerging markets that are important customers for European exports, like China and Brazil, are tightening credit to prevent their economies from overheating. The United States, another main market, is stuck in its own economic rut.

In a sign of how quickly the ground is shifting, the European Central Bank on Thursday could well lower interest rates — just a few months after it started raising them in what is now seen by many as a misguided effort to stem incipient inflation.

Distress is increasingly evident across Europe. Philippe Leydier had been feeling more upbeat about his business until this summer, when orders for his French company’s corrugated boxes suddenly began to slide. Orders fell further last month as auto parts makers, electrical engineering firms, farmers and other industries reduced production.

“The euro crisis and the financial crisis linked to the debt of European countries is serious,” said Mr. Leydier, whose box and paper manufacturing business in Lyon, Emin Leydier, often provides an early signal of seismic shifts in economic activity. “European governments need to find a solution — and fast.”

In Italy, which has the euro zone’s third-largest economy, after those of Germany and France, a €45 billion, or $60 billion, austerity program has many worried about a recession. Paolo Bastianello, the managing director of Marly’s, a clothing retailer, has also seen his hopes fade.

At the start of the year, Mr. Bastianello was more optimistic that Europe might escape its troubles and that Italy’s dysfunctional government would seriously tackle the country’s problems. “But the turbulence of the markets and the uncertainty about this abnormal mass of public debt just scare people away from buying,” he said.

Not everyone is so pessimistic, especially in Germany. But even there, indicators are pointing to slower growth.

German executives say sales remain healthy, at least so far. “We don’t see any impact on our business,” said Roland Busch, a member of the management board of Siemens, the electronics and engineering giant based in Munich.

“The economy is cooling down but not more than that,” said Mr. Busch, who oversees a unit that supplies traffic-control systems, street cars and other products for public works.

Expecting demand for urban infrastructure improvements to grow, Siemens plans to add about 150 people over the next two years to the 850 employees at its complex in Sacramento, California, that makes light-rail cars.

Bucking the trend almost everywhere else in the developed world, unemployment in Germany continues to fall, and there are shortages of skilled workers in several key sectors.

“We know Germany is an exception,” said Jörg Köther, a spokesman for the IG Metall union.

Article source: http://www.nytimes.com/2011/10/05/business/global/europe-finds-slope-ahead-is-growing-ever-steeper.html?partner=rss&emc=rss

Link by Link: In Times of Unrest, Social Networks Can Be a Distraction

Apparently even during a revolution.

That is the provocative thesis of a new paper by Navid Hassanpour, a political science graduate student at Yale, titled “Media Disruption Exacerbates Revolutionary Unrest.”

Using complex calculations and vectors representing decision-making by potential protesters, Mr. Hassanpour, who already has a Ph.D. in electrical engineering from Stanford, studied the recent uprising in Egypt.

His question was, how smart was the decision by the government of President Hosni Mubarak to completely shut down the Internet and cellphone service on Jan. 28, in the middle of the crucial protests in Tahrir Square?

His conclusion was, not so smart, but not for the reasons you might think. “Full connectivity in a social network sometimes can hinder collective action,” he writes.

To put it another way, all the Twitter posting, texting and Facebook wall-posting is great for organizing and spreading a message of protest, but it can also spread a message of caution, delay, confusion or, I don’t have time for all this politics, did you see what Lady Gaga is wearing?

It is a conclusion that counters the widely held belief that the social media helped spur the protests. Mr. Hassanpour used press accounts of outbreaks of unrest in Egypt to show that after Jan. 28, the protests became more spread around Cairo and the country. There were not necessarily more protesters, but the movement spread to more parts of the population.

He called this a “localization process.” “You can say it would be hard to measure that,” he added, talking about his research, “but you can test it, what happens when a disruption goes into effect.”

“The disruption of cellphone coverage and Internet on the 28th exacerbated the unrest in at least three major ways,” he writes. “It implicated many apolitical citizens unaware of or uninterested in the unrest; it forced more face-to-face communication, i.e., more physical presence in streets; and finally it effectively decentralized the rebellion on the 28th through new hybrid communication tactics, producing a quagmire much harder to control and repress than one massive gathering in Tahrir.”

In an interview, he described “the strange darkness” that takes place in a society deprived of media outlets. “We become more normal when we actually know what is going on — we are more unpredictable when we don’t — on a mass scale that has interesting implications,” he said.

Mr. Mubarak’s government collapsed and the former president, at age 83, now finds himself being wheeled into a Cairo court on a hospital bed to face charges of corruption and complicity in the killing of protesters.

Jim Cowie, the chief technology officer of Renesys, a company that assesses the way the Internet is operating across the world, believes that another besieged leader, Col. Muammar el-Qaddafi, may have taken note of the Egyptian experience.

In a blog post on the company’s Web site, “What Libya Learned From Egypt,” Mr. Cowie writes that in March, Libya toyed with the idea of pulling the switch on its Internet service.

Libya’s leaders “faced this same decision in the run-up to civil war,” he wrote, “and each time, perhaps learning from the Egyptian example, they backed down from implementing a multiday all-routes blackout.”

Sophisticated governments will realize that “shutting down radicalizes things,” he said in a phone interview. What is more useful to governments, he said, was “bandwidth throttling,” recognizing that “Internet is something you can meter out.” This “metering out” is meant to make the experience less reliable and responsive, he said, so that video streaming is hesitant and Web pages are slow to load.

Iran, Mr. Cowie said, was one of a number of countries that have realized that “you don’t turn off the Internet anywhere — you make it less useful,” controlling which neighborhoods get it, for example.

Mr. Hassanpour, who was born and raised in Iran, agreed: “Iran does it in a localized way.”

Article source: http://feeds.nytimes.com/click.phdo?i=21d2f7c4a8eb1458149b314dd9800abe