The stagflation syndrome

Les Echos newspaper analyses the phenomenon of "stagflation" now being felt in Europe. "Symptoms have redoubled in recent weeks. Now there can be no doubt: Europe is suffering from stagflation. The first hit were the UK and Italy. With the exception of Berlin, all of the capitals are now preparing to admit their mistakes. A year after the dream that the 'subprime crisis' would be limited to the American real estate market, ... the reality is now emerging. ... Certainly one should not overdramatise and say that recession is unavoidable. ... Nevertheless the lull in combat over euro-dollar parity and raw materials must continue. The times are uncertain, and the smallest spark could set all the powder kegs on fire. The confrontation between Russia and Georgia over South Ossetia is the most ominous warning - right before Europe's doors."

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