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Original summary

Ambrose Evans-Pritchard, in The Telegraph of October 23, 2013 analyses Europe’s debt crisis.

According to Evans-Pritchard, more and more European states are suffering from the recent “trend” of deflation as prices are falling and debt is increasing. Spain and Italy, for instance, are pushed into runaway debt trajectory and even Germany, renowned for having a flat inflation, is said to be in danger of deflation too.  Debt itself is already difficult to overcome but with deflation, the situation becomes lethal. Basically, Europe is now feared to end up in the same situation like Japan, sliding into a deflationary trap which will have hardly any turning back.  Nevertheless, possible solutions are proposed to try to, no matter how, break out of the impasse. The ECB, for instance, should do whatever it takes to keep inflation high enough to lower the risk of deflation in any vulnerable country. Another way to protect Europe from a complete deflation disaster would be the ganging up of the Club Gang on Germany and forcing the country to accept inflation.

No matter which way Europe chooses to stabilise deflation and debt, measures must be taken before Europe ends up in the same deflation lodge as Japan.

Corrected version

Ambrose Evans-Pritchard, in The Telegraph of October 23, 2013 analyses Europe’s debt crisis.

According to Evans-Pritchard, increasing numbers of European states are suffering from deflation as prices are falling and debt is increasing. Spain and Italy, for instance, are being pushed into runaway debt trajectory and even Germany, renowned for having flat inflation, is said to be in danger of deflation too.  Debt itself is already difficult to overcome, but with deflation, the situation becomes lethal. Europe now fears a situation like Japan, sliding into a deflationary trap which will be hard to escape. 

Nevertheless, possible solutions are proposed to try to break the impasse. The ECB, for instance, should do whatever it takes to keep inflation high enough to lower the risk of deflation in any vulnerable country. Another way to protect Europe from a complete deflation disaster would be the uniting of the Club Gang against Germany and forcing the country to accept inflation.

No matter which way Europe chooses to stabilise deflation and debt, measures must be taken before Europe ends up in the same deflation lodge as Japan.