Europe’s economy is more worrying than America’s yield-curve inversion
Bond markets are sounding warnings on both sides of the Atlantic. But the message is much worse in Europe
The Economist 2019-3-29
Article
ON MARCH 22ND Germany’s worst manufacturing survey in seven years sent investors rushing to buy bonds. For the first time in three years yields on German ten-year government debt fell below zero, meaning that investors are willing to pay to hold it. And later that day in America the yield on ten-year Treasury bonds fell beneath that on the three-month variety. The last time that happened was 2007, one of the “inversions” in bond-market yields that preceded each of the past seven American recessions.
These bond-market blues are fuelling concern that the global upswing in 2017 and 2018 is making way for a slump. There are reasons to worry. Tax cuts have boosted demand in America but will not be repeated; China has slowed; the trade war grinds on. However, indiscriminate global gloom is a mistake. America and Europe are in vastly different positions. Only Europe should be a cause of deep concern.
America’s inverted yield curve suggests that the Federal Reserve’s interest-rate rise in December, its ninth in three years, will be its last for now. But that does not mean recession is imminent. The Fed has recognised—belatedly—that the risks to growth have risen, as Jerome Powell, its chairman, confirmed on March 20th. And America is in a position of relative strength. Unemployment is low; consumers are flush with cash; and underlying inflation is close to the Fed’s 2% target (see article).
Europe is in a tighter spot. Although America may have finished raising rates, the euro zone has never got started. Growth this year could be little more than 1%. Wage growth is muted, inflation is below target and Italy is in recession. With rates close to zero, the response of the European Central Bank (ECB) has been to postpone monetary tightening and to provide more cheap funding for banks. Its willingness to do more may be limited. On March 27th Mario Draghi, its head, said that the ECB sees its inflation forecast as having been “delayed rather than derailed”.
The primary cause of Europe’s slowdown—and particularly Germany’s—is falling global trade, notably China’s slackening demand for goods. The continent relies on Asian markets far more than America does and China slowed in late 2018. Policymakers there are now trying to stimulate the economy. A rebounding China could yet come to Europe’s rescue, especially if Donald Trump and Xi Jinping strike a trade deal.
That the fate of the euro zone should depend on Beijing and Washington is a dereliction of duty. It is an economic superpower with its own fiscal and monetary levers. It should be countering downturns itself. More unconventional monetary stimulus will be hard thanks to northern Europe’s horror of appearing to create money to finance deficits. But the euro zone has room for fiscal stimulus. Its aggregate budget deficit was just 0.6% of GDP in 2018. Its net public debt was 69% of GDP.
Because Europe lacks a centralised fiscal policy—itself a failure of politicians—the onus is on individual countries. Those with healthy finances, such as Germany and the Netherlands, could enact a co-ordinated budgetary loosening. They should focus on tax cuts and boosting public-sector infrastructure and defence spending. Unless they do, the euro zone risks falling back into stagnation—the trap it faced after the financial crisis. For the euro zone to tolerate that risk in the name of prudence is self-defeating. Astonishingly, the chances are that it will.
Notes
ON MARCH 22ND Germany’s worst manufacturing survey in seven years sent investors rushing to buy bonds.
德国制造业处于滑坡，创下7年最低；『送』投资者去买债券了，send的表达不错
Ex：The high price of the newest iphone sent customers rushing to buy Huawei.
PS: stock 和 bond，股票和债券是重要的两种投资手段，相互为alternatives，哪个好去投资哪个。
the yield on ten-year Treasury bonds fell beneath that on the three-month variety.
怎么比收益率？fall beneath that of …
fuelling concern
火上浇油，猛烧一把，进一步加剧了担忧
These bond-market blues are fuelling concern that the global upswing in 2017 and 2018 is making way for a slump.
全球的改善，将让步于衰退
Tax cuts have boosted demand in America but will not be repeated
减税刺激需求
the trade war grinds on
grind 'on to continue for a long time, when this is unpleasant 令人厌烦地继续下去
The argument ground on for almost two years.
这场争论拖拖拉拉持续了近两年。
Unemployment is low; consumers are flush with cash; and underlying inflation is close to the Fed’s 2% target
flush: 富有很有钱
这是美国的现状，挺不错的。
Europe is in a tighter spot.
a tight 'spot/ 'corner a very difficult or dangerous situation 困境；险境
Growth this year could be little more than 1%. Wage growth is muted, inflation is below target and Italy is in recession. With rates close to zero, the response of the European Central Bank (ECB) has been to postpone monetary tightening and to provide more cheap funding for banks.
The primary cause of Europe’s slowdown—and particularly Germany’s—is falling global trade, notably China’s slackening demand for goods.
经济减缓的主要原因（尤其是德国），主要是全球贸易下降，中国需求放缓减弱
come to Europe’s rescue
come to sb’s rescue
A wealthy benefactor came to their rescue with a generous donation.
一位富有的赞助人慷慨解囊挽救了他们。
That the fate of the euro zone should depend on Beijing and Washington is a dereliction of duty.
玩忽职守
PS：欧元区的命运主要还是取决于中国，美国就是在玩忽职守，只顾自己。结合之前关于华为5g的文章，可见经济学人文章对于美国的态度。
It should be countering downturns itself
遭遇经济衰退
monetary stimulus
货币刺激
Because Europe lacks a centralised fiscal policy—itself a failure of politicians—the onus is on individual countries.
缺乏集中统一的财政政策；主要责任
enact a co-ordinated budgetary loosening.
放松财政预算
They should focus on tax cuts and boosting public-sector infrastructure and defence spending.
刺激公共基础设施建设支出与国防支出
Unless they do, the euro zone risks falling back into stagnation
面临危险，即重回停滞的状态
Views
美国国债与欧洲国债（德国）收益率曲线出现了倒置（原本应该是长期债券的收益率比短期高，现在却是短期比长期高），很有可能说明未来经济会急转直下（因为2007年那会儿也出现过这样的征兆）。
但是呢？你欧洲和美国还不一样，别不当回事儿（你和放羊人聊了一整天，天黑了，放羊人的羊吃饱了，你却什么事儿都没做成）。美国现在状态还很不错的（减税、加息、失业率、通货膨胀），但是欧洲就不行了。
欧洲出现衰退（尤其是德国的制造业），主要原因是全球贸易的减弱，尤其是中国需求减弱。所以还得看中国。
就欧洲内部而言，想要通过货币手段来脱困比较难（政府影响经济的两种手段，货币政策和财政政策），但是货币手段是欧盟能够相对统一调动的手段了，财政手段都看各家本事，不好步调一致。所以作者呼吁，欧洲国家，应该多用用财政手段了，而且最好能协调一致，enact a co-ordinated budgetary loosening，否则，肯定摆脱不了经济衰退的悲剧。
