The global economy underwent a major ordeal after the housing bubbles in Europe and the United States burst in 2007. Almost six years have passed since the Federal Reserve followed the Bank of Japan’s lead a decade earlier and took U.S. interest rates down to zero, yet the unemployment remains elevated and industrial output has only recently recovered to the levels of 2008. In Europe, the unemployment rate is running near the euro- era high of 12 percent even though the European Central Bank (ECB) also cut interest rates to zero.

The output picture in Germany improved a lot and reached the level which was seen before 2007 but the same couldn’t be said about Spain and France, where the production level is no better than what it was in 1994, and in Italy production has fallen back to 1987 levels. United Kingdom industrial production is no higher than it was in 1992. In Japan, which was geographically far removed from the Western bubbles, the mood has improved since “Abenomics” was launched at the end of 2012, but industrial output remains stuck at the levels of 2003. Some have dubbed this situation “secular stagnation”.

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