Shocking Youth Unemployment: A Tragedy Unfolds, Only Solution is Substantial Devaluation of the Euro

The U.K. Telegraph tonight has a very sad article in the state of youth employment in Europe.

Take a look at these absolutely shocking numbers:

Youth unemployment rates:

-Spain: 30%
-Lithuania: 31%
-Latvia: 20%
-Ireland: 26%
-Slovakia: 26%'
-Italy: 25%
-Hungary: 25%
-France: 24%

EU officials are extremely concerned by increases on unemployment to 9.6% in August (18.9% in Spain). They know that the pattern of past cycles is that continental Europe is significantly slower than the U.S. or the UK to recover jobs "because of rigid labour markets". However, the problem is, the U.S unemployment is actually getting worse, not better. It seems even worse now because the crisis has caused "permanent damage to the EU’s industrial foundations".

As a result, European finance ministers have delayed the withdrawal of emergency stimulus until 2011 at the earliest, fearing continued strains in the credit system and an alarming rise youth unemployment.

Demographic time-bomb

The EU’s economics commissioner said that Europe’s potential growth rate had been hanved to 1% by the events of the last two years, due to destructive effects of bursting debt bubbles. "This poses a grave challenge for Europe as the fuse burns ever closer on its demographic time-bomb".

"There's tragedy unfolding here," said Julian Callow, Barclay’s Europe economist. "This is going to haunt the political outlook for years to come. Europe has been in denial about this because youth are not a powerful lobby like the unions, so they can be ignored. This will erode Europe’s human capital and threaten a lost generation of workers," he said.

"The only solution to hold Europe together is a substantial devaluation of the euro".

World currencies are complete mess, this will not end pretty. You heard it here many times. Many investors think that if they have their money in money markets they are safe. They are not.