New statistics out of Greece show that austerity shrunk the economy more than expected last year. GDP in Greece fell 6.8% in 2011, and a slightly faster 7% in the fourth quarter. The country is in a fifth straight year of recession, approaching a full-on depression.
European leaders are still trying to impose more austerity, but some Eurozone finance ministers may be trying to force a default and exit from the euro.

A variety of links to articles/interviews on current topics that may be of interest.

A variety of links to articles/interviews on current topics that may be of interest.

A variety of links to articles/interviews on current topics that may, or may not, be of interest.

A variety of links to articles/interviews on current topics that may, or may not, be of interest.

France and Germany have reached agreement on a fiscal plan for Europe that has everything to do with veto power for the European Commission over sovereign budgets and very little to do with the long-term problem of smoothing growth over 17 different countries operating under one monetary union.

The powers controlling Italy, namely the EU, have decided that this time of imminent recession in Europe is a perfect backdrop to start paying down Italian debt, at odds with all economic theory. So the new government has ordered that retirement ages be raised and pension benefits cut to satisfy the austerians.

A variety of links to articles and interviews on current topics that may, or may not, be of interest.

We have a better sense of the situation in Europe, or at least the game being played by Angela Merkel and the European Central Bank, in tandem. Merkel and the ECB, before acquiescing to any scheme involving Eurobonds or running the printing presses, want to tighten fiscal integration among Eurozone countries, with the attendant loss of national sovereignty and real penalties for breaking fiscal guidelines.

One of the on-going arguments across the blogosphere and even the entire world is whether the economic problems of the last ten years are more related to incompetence or basic corruption. I must say, just the last week has offered plenty of evidence for both views. For example, we had this article from Bloomberg yesterday (Tuesday, November 29) about how then Treasury Secretary Hank Paulson met with his hedge fund buddies and gave them the first class insider information on his plans to place Fannie Mae and Freddie Mac into “conservatorship.”