Europe's Austerity-Fueled Depression Keeps Getting Worse

Europe's central bank just slashed interest rates and launched emergency stimulus measures -- but six years too late, and not enough to counter the austerity that has Europe in a worse mess than the Great Depression.

The European Central Bank surprised markets on Thursday by cutting its target short-term interest rate to basically zero. ECB also plans to buy a bunch of bonds to push longer-term rates lower, too -- an echo of the U.S. Federal Reserve's many rounds of "quantitative easing," used in recent years to goose the economy (or at least the stock market).

Good job, good effort, ECB, except this comes nearly six years after the Fed cut its own rates to zero and launched QE. In other words, the ECB is way behind the game. That's one reason the U.S. recovery, unsatisfying as it has been, looks like the 1990s economic boom compared to the crap hoagie that is Europe's economy.

Europe's current slump is worse than the Great Depression, as Paul Krugman and many others have pointed out. Here's a chart for evidence, via Professor Nicholas Crafts at the University of Warwick:

The red line represents Europe's current GDP growth and the forecast for the next year or so. As you can see, it's flatlined. The black line shows the growth of European countries that wisely dumped the gold standard during the Great Depression of the 1920s and '30s. The yellow line shows the countries that stuck with gold for too long. Europe is currently doing just about as well as those miserable countries.

In fact, this chart is about eight months old, and the red line's end should probably be lower than it is. Europe's GDP has relapsed lately, raising fears of a triple-dip recession, as this graph from Trading Economics shows:

U.S. GDP hasn't exactly been gangbusters, but it's at least managed to stay positive (mostly):

Europe's unemployment rate, meanwhile, is 11.5 percent, compared with 6.2 percent for the United States. European inflation is also dangerously low, near zero percent, while U.S. inflation isn't far from the Fed's target of 2 percent.

Low inflation sounds great, unless you consider the case of Japan, or the U.S. in the Great Depression. In those cases, prices kept falling, so people stopped buying stuff because they expected prices to fall -- which they did, which made people continue to not buy stuff. All the while, the economy got worse.

That's the path Europe is on. It's largely the fault of Europe's fiscal policy makers, who have stubbornly refused to spend money to stimulate the economy, aside from a paltry stimulus package that amounted to just 1.5 percent of GDP in 2008. By comparison, the U.S. stimulus plan in 2009, though probably not nearly big enough, was worth more than 5 percent of GDP. Europe has also imposed strict austerity measures on Greece and other countries struggling with high debt loads.

The ECB hasn't helped by waiting too long to act aggressively. And now it's playing catch-up in the middle of a depression.

In America, Only The Poor's Eating Habits Aren't Improving

CHICAGO (AP) — Americans' eating habits have improved — except among the poor, evidence of a widening wealth gap when it comes to diet. Yet even among wealthier adults, food choices remain far from ideal, a 12-year study found.

On an index of healthy eating where a perfect score is 110, U.S. adults averaged just 40 points in 1999-2000, climbing steadily to 47 points in 2009-10, the study found.

Scores for low-income adults were lower than the average and barely budged during the years studied. They averaged almost four points lower than those for high-income adults at the beginning; the difference increased to more than six points in 2009-10.

Higher scores mean greater intake of heart-healthy foods including vegetables, fruits, whole grains and healthy fats, and a high score means a low risk of obesity and chronic illnesses including heart disease, strokes and diabetes. Low scores mean people face greater chances for developing those ailments.

The widening rich-poor diet gap is disconcerting and "will have important public health implications," said study co-author Dr. Frank Hu of the Harvard School of Public Health. Diet-linked chronic diseases such as diabetes have become more common in Americans in general, and especially in the poor, he noted.

"Declining diet quality over time may actually widen the gap between the poor and the rich," Hu said.

Harvard School of Public Health researchers developed the healthy diet index used for the study. It is similar to federal dietary guidelines but features additional categories including red and processed meats, sugar-sweetened beverages and alcohol.

The study authors used that index along with government estimates on trans fat intake to evaluate information in 1999-2010 national health surveys that included interviews with people about their eating habits. The results are published Monday in JAMA Internal Medicine.

Hu said the widening diet gap reflects an income gap that deepened during the recent financial crisis, which likely made healthy food less affordable for many people. Hu also noted that inexpensive highly processed foods are often widely available in low-income neighborhoods.

The overall diet improvement was largely due to decreased intake of foods containing trans fats but the disappointing results point to a need for policy changes including better nutrition education, Hu said.

In recent years the government and manufacturers have moved to phase out use of artificial trans fats in foods including processed cookies, cakes, frozen pizza and margarines. Trans fats contribute to unhealthy cholesterol levels and can increase heart disease risks. These fats are made by adding hydrogen to vegetable oil to improve texture and shelf life.

The study authors say their results are consistent with an earlier report showing that "nearly the entire U.S. population fell short of meeting federal dietary recommendations."

The federal guidelines are updated every five years and new ones will be issued next year. The current recommendations emphasize limiting intake of trans fats, sodium, processed foods and added sugars. They don't specify amounts but encourage diets high in whole grains, vegetables and fruits.

The Harvard index has a similar emphasis with some specifics; to get a top score would include eating daily more than two cups of vegetables, at least four servings of fruit and at least one ounce of nuts.

A JAMA Internal Medicine editorial says the Harvard diet index isn't perfect because it puts equal emphasis on various foods that may not contribute equally to health. Still, the study highlights a "growing chasm" that is a public health concern, the editorial says. It suggests that government efforts to close the gap with programs including food stamps may be insufficient and that limiting government benefits to cover only healthful foods might be a better strategy.

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Online:

JAMA Internal Medicine: http://jamainternalmedicine.com

Federal dietary guidelines: http://tinyurl.com/9yjgeoz

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AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner