Europe’s Trap
By Paul Krugman

There are many risks in the world economy right now — a possible Chinese hard landing (local governments depend heavily on land sales for revenue? Oh, boy), a financial crisis in Russia and other oil exporters, etc.. But one thing is not a risk, because it has already happened: the euro area has entered a Japan-style deflationary trap.

No, it’s not literally deflation at an EA-wide level, but that doesn’t matter — slightly positive and slightly negative inflation with interest rates already at the zero lower bound are essentially the same. Furthermore, southern Europe still needs substantial amounts of “internal devaluation” — that is, still needs to reduce costs and prices relative to Germany — so that a low overall euro area inflation rate means destructive deflation in much of the continent.

And if you look at the implied market forecast, it’s truly disastrous. Right now, German 5-year bonds offer a yield of zero — an implicit firm forecast that Europe will be in a liquidity trap for the foreseeable future, while 5-year index bonds are yielding about -0.35 percent. That’s telling you two things: investors see so little in the way of profitable investment opportunities that they’re willing to pay the German government to protect their wealth, and they expect something like 0.3 percent inflation over the next five years, which is catastrophically below target.

How is this supposed to end? I like and admire Mario Draghi, and believe that he’s doing his best. But it’s really hard to see how the ECB could gain enough traction here to solve the problem even if it didn’t face internal dissent from the hard-money types.

So don’t think of Europe as having a tough but workable economic strategy, endangered by Greek voters and such. Europe is at a dead end; if anything, Greece is doing the rest of Europe a favor by sounding a wake-up call.

克魯曼：歐元區陷入「日式通縮」

諾貝爾經濟學獎得主克魯曼（Paul Krugman）在紐約時報撰文指出，全球經濟面臨各種危機，例如中國經濟有「硬著陸」的風險，俄羅斯等原油出口國陷入金融危機，但歐元區步入「日式通縮」的陷阱。

即使通縮還不到擴及歐元區全區，在利率已接近零的情況下，正零點幾的通膨率與負零點幾的通膨率基本上相差無幾。

南歐諸國仍須進行大量的「內部貶值」（internal devaluation），讓成本與價格相對於德國降低，歐元區的低通膨意味著歐陸多數地區面臨毀滅性的通縮。

從市場隱含的預測可知其災難性。目前德國5年期指數債券殖利率約為負0.35%，這個數字說明了兩個事實。首先，投資人看不到什麼有利可圖的投資機會，寧願付錢給德國保護他們的財富。再者，他們認為未來五年通膨率僅有0.3%。

該如何終結亂局？克魯曼表示，他向來敬佩歐洲央行（ECB）總裁德拉基，也相信德拉基已盡最大努力。然而即使拋開內部歧見不談，也難以看出ECB究竟準備如何解決問題。

原文參照：
http://krugman.blogs.nytimes.com/2015/01/05/europes-trap/

2015-01-07．經濟日報．A6．國際．編譯黃智勤