This is the beginning of a recovery....surely

The Wall Street Journal has a piece on the Eurozone today where central bank officials promise to do whatever it takes to beat deflation.  The plan appears to be for more QE.  Here is a chart that summarizes their problem:







Banks aren't loaning money out.  But no worries:

After all, the measure works by encouraging
businesses and households to borrow and spend. But in the euro zone,
where 70% of corporate finance is provided by banks, bond purchases may
make little difference to the availability of credit because many banks
are still trying to shrink their balance sheets.

Private-sector credit supply continues to contract in the euro zone despite the sharp fall in bond yields this year.

But
if the banking system is in poor shape, why are policy makers
increasingly optimistic about the recovery? Part of the answer is that
too much focus is being placed on credit growth.

One
in five recoveries is "creditless" according to a 2011 International
Monetary Fund working paper. Credit growth remained very subdued for
several years during the recovery from Sweden's financial crisis in the
early 1990s, according to J.P. Morgan research. U.K. bank lending is
only now starting to pick up, more than a year after a strong recovery
began.

 I am a bit skeptical.  A normal recession does not create the kind of havoc that the Great Recession has.  I'm not sure that income and savings are sufficient to jump start the economy.  And yet, it is a business cycle afterall.  At some point, things have to improve.



ECB Chief Draghi Banks on New Whatever It Takes - WSJ.com