As idle macroeconomic speculation I wonder what declining/aging populations might have to do with this deflation/depression combination. Japan was ahead of the curve in collapsing fertility and rapid aging and ahead in deflation, and now much of W. Europe might follow them. I've never given any thought to why that might theoretically happen, but it is an interesting coincidence. Italy is probably the worst demographic country in Europe, so if there is anything to it they should feel deflation/depression first and feel it worst.
Well, if you want consumers to spend money like drunken sailors, there's really no substitute for teenagers and college students....lots of them.
Good comment by Untenured. With "two few cradles and too few funerals" these countries face a demographic crisis that can only affect their economies negatively. That, and their fixation on preserving an unsustainable "social model" puts them on th edge of a cliff.
I believe it has been established, and validated in Japan, that as people age beyond middle age they buy progressively fewer consumer goods. They have everything they need, they don't need anything new, and status symbols lose their attractiveness relative to retirement and financial security.
I would say that aging populations have a very distinct effect on spending and thus on the approach to the deflationary tipping point. If so, Eurozone is definitely in for it.