The Economist's Digest 22

Economic gloom in Europe
The euro zone’s first recession
Originally from Economist.com Nov.14th, 2008

Summary:
November 14th, the European economy officially fell into its first recession since the euro was introduced. One of the worst affected is Germany , where GDP fell by 0.5% in the quarter and 0.4% in the previous quarter.
As a result of slow-d0wn economies, German’s economy output is shrinking. It is estimated Germany ’s GDP may fall 1% next year.
German should use more intense fiscal policy to boost demand in the country. There’s a modest package appear; however, an American economist doubted that cutting taxes and simply spending more money would work.
On the other hand, output of all Europe ’s 27 economies also slid by 0.2% in the quarter. Britain and Spain are likely to be hurt particularly by downturns in household spending as consumers worry about collapsing house prices and high levels of debt. Only one country dodged the recession----- France , whose economy grew by 0.1% in the third quarter, supported by consumer spending and corporate investment.
However, there’s still hope. One is the devaluating euro, which is good for European exporters to give their goods outside Europe . Another is that inflation is now falling sharply, allowing the bank to cut rates forcefully.

My opinion:
Is this the first step to deflation? Well, it may not be so------or should I say, “We hope not.” Nevertheless, we are in a worse situation, a mixture of inflation and deflation. The credit collapse, yet the commodity prices are high.
Actually, most developed countries are stepping into their first recession in this decade, including Japan , America , and someone special------ Taiwan , since it’s hard to define that whether Taiwan is a developed country or not.
On the other hand, many countries started to stimulate domestic consumption in different ways. Will it work in this “mixed” recessions?