Economy: Europe - Bye, Bye Crisis

It seems the Euro crisis is over. Last week the German stock index (DAX) closed on a five-years high. Since last June this gauge climbed around 30%. And the Euro is in rally mode too: Since last July the common currency gained around 14 cents (more than 10%). And the interest rates for Spain, Italy and other struggling members of the European community are dropping thanks to the rising confidence for these countries.

All these developments are signaling that Europe is leaving the crisis behind. I looks like the European economies are now adapting to the severe austerity policy (a sharp reduction of government expenditures which reduces the income of large parts of the populations). Over time the retreat of the governments leads to less bureaucracy and creates more scope for private enterprises.  Hence the austerity policy creates an exchange - more growth in the future for less growth in a short  period in the present.

Now the European companies are responding and do whatever they ever do in a crisis: They are reducing costs and are working more efficiently. For instance they are investing in software and other cutting edge technologies which help them to conduct their business better. This already creates more revenue for the supplier of efficiency tools like the German business software giant SAP.

Companies also are tapping new markets, especially in overseas, to escape the European weakness. They are enjoying a lot of tailwinds from the solid US consumer spending and the strong growth in China and other emerging markets. Companies like Volkswagen and Unilever (consumer products) are exporting more & more to the markets in Asia and the Americas. No wonder that the stock markets in Frankfurt and London are moving northwards instead of the continuous lament in the media.