Deflation sees Europe start turning Japanese

The latest iteration of the European crisis has seen the rot spread to the big core economies. Now some in the US fear a secular slowing there. 
I have just returned from a European river cruise that took me from Amsterdam toBudapest. It's a voyage that's highly recommended.
It's the height of the summer season in the northern hemisphere and normally popular itineraries such as the one I sailed are full to capacity.
On this particular line, most of those travelling are Americans.Their tourist dollars are the economic lifeline for the medieval villages along the route.
This year our boat – a boutique vessel compared with some of the others – carried only 93 passengers, well short of its 130 capacity, with Australians and New Zealanders well represented.
Drawing conclusions about the European economy in general from such a narrow and selective database is hardly scientific, but it served to point me in the direction of more pertinent data.
It's just over two years since Mario Draghi, the president of the European Central Bank, surprised the financial world with a pledge that he would do "whatever it takes" to protect the euro zone from collapse.
He was not setting up a straw man. The outlook for the euro zone was becoming increasingly bleak, as the solvency of banks in Greece, Portugal, Ireland and Spain was the subject of constant speculation that was feeding panic and raising the very real risk of systemic failure across the whole of the euro zone and beyond.
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Max Walsh


Max Walsh was for many years one of Australia’s top economic and political commentators, highly regarded as a journalist, author and broadcaster. Throughout his career, Max was involved in all dimensions of the media industry, which has encompassed positions with two of Australia’s largest publishing companies and television networks.

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