Who is right about struggling Europe?

The recent volatility in European equity markets illustrates the continued anxiety that the peripheral debt crisis is causing global investors. In particular, the thing that every-one is trying to square is the impact of Europe’s debt crisis on: business, the cycle, consumer demand and growth, the tension between the positive direction of expectations embedded in the market prior to the recent sell-offs, and the negative effects of austerity and regulation of capitalism. Add to this the threat of rate rises and slowdown in China (and indeed globally), the first signs of deflation in Spai...