Just a few months ago Europe’s austerians were busy congratulating themselves, declaring that a modest upturn in southern Europe vindicated all their actions. But now the news is looking grim, with industrial production stalling out and good reason to fear yet another slide into recession:

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This comes as many though not all US data points are suggesting stronger growth. So why has Europe done so badly? I’m actually not too committed to any one story here; there are arguably several factors.

First, there is fiscal austerity, which has been a very big drag. It’s important to realize, however, that the US has also had quite a lot of de facto austerity via the sequester and all that at the federal level, and state and local cutbacks. If we use the IMF’s measure of structural balances, Europe has indeed tightened relative to the United States:

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But it’s not as big a difference as you might think — maybe 2 1/2 points of potential GDP.

You can also argue that Europe’s fundamentals are considerably worse. If you’re worried that secular stagnation might be depressing the natural real rate of interest — the rate consistent with full employment — and you think that demography is a big factor, Europe looks really terrible, indeed full-on Japanese:

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This says that Europe really, really needs to keep inflation expectations from sliding — in fact, it almost surely needs expected inflation higher than 2 percent. In fact, however, the ECB has been much less successful than the Fed at keeping expected inflation from declining.

And this reflects past policy choices and what they say about institutional biases. In the US, Janet Yellen and associates have been quite clear that they are prepared to take some inflation risks on the upside in order to avoid the “nightmare scenario” of raising rates only to discover that the economy was weakening again, and thereby deepening the liquidity trap. In Europe, however, the nightmare scenario isn’t hypothetical: it happened both in 2008 and, incredibly, again in 2011. And the sadomonetarists at the BIS and elsewhere continue to have much more influence in Europe than in the United States.

The thing is, I don’t believe that current management at the ECB is that different in its understanding of what policy should be doing from leadership at the Fed. But it has to struggle against an economy that is weaker in its underlying fundamentals, bad history, and a much more powerful contingent of monetary hawks.

It really is quite scary.