Newsflash: the central bank of Germany, the Bundesbank, is raising red flags about the growth of the German economy. The bank expects Germany’s gross domestic product (GDP) to only grow at 0.4% in 2013, compared to a previously forecasted 1.6% in only June of this year. Similarly, another eurozone country, Austria, slashed its forecast for the next year. Austria’s central bank now predicts its economy will only grow at the pace of 0.5% next year, much lower than the bank’s previous forecast of 1.7%. I really don’t have to go into details about how badly the other debt-infested eurozone countries are performing. These pages are often filled with that. What I want to say today is that the entire region is deteriorating quickly, and the dynamics of the next recession there are going to be much different than in 2008. The stronger nations in the eurozone are starting to suffer. And it’s not only Germany and Austria slashing their GDP growth targets. France, the second-biggest economy in the eurozone, narrowly by-passed a recession in the third quarter of 2012, when its GDP growth fell to 0.2%. (Source: Associated Press, November 15, 2012.) Going forward, the French government is skeptical about economic growth prospects. While the media is fixated in North America on the pending fiscal cliff, the picture developing in the eurozone is alarming. The region’s governments simply have too much debt and do not have enough tax revenue coming in. The European Central Bank ( ECB ) wants to take the same approach to avert the crisis as the Federal Reserve took here in the U.S.—and we all know how well that’s working. I, for one, would not be surprised to see the eurozone region fall into a depression. I see Greece in a depression right now; Spain is not far behind. (Anytime you have an unemployment rate of 25%, how can you not be in a depression?) So until the stronger countries like Germany and France decide to either kick the weaker countries out of the eurozone union or leave themselves, the situation will deteriorate. For us here in the U.S., with the entire eurozone region now teetering on the brink of recession, American companies in key stock indices, like the S&P 500, will suffer. Almost half of the companies in the S&P 500 derive sales from Europe. The year 2013 does not look good for North American stock markets. Where the Market Stands; Where It’s Headed: The stock market is not disappointing us yet. It is delivering its annual Christmas rally like it always does. But, as I have been writing, I expect 2013 to be a poor year for North American equities. ... Read More