What's going on?

Mario Draghi, the head of the European Central Bank, met with the European parliamentarians yesterday and in his comments he reiterated his pledge to keep the ECB�s bond buying programme (known as quantitative easing) going until at least September 2016. If necessary, the programme could be extended beyond September 2016, if the ECB�s inflation goals are not met by then. However, the ECB is still expecting a relatively high unemployment rate of 10% by September 2016.

What does this mean?

The high unemployment in the Eurozone suggests that the recent economic crisis has permanently destroyed the economy�s ability to create jobs. Even as conditions improve, unemployment will remain high. Of particular concern is youth unemployment in countries like Spain and Italy, where more than 40% of under-25s looking for work cannot find it.

Why should I care?

High unemployment is a serious problem for the fairly obvious reason that its better for the economy as a whole if people are working and paying taxes versus not working and consuming social services. Keep in mind that the unemployment rate measures the percentage of people that are looking for work and cannot find it; it does not include those that have given up looking for a job. The inability of an economy to create jobs for those who want one (especially young people looking to get on the employment ladder) is a threat to the very idea of capitalism and has already led to an emergence of �radical� political parties in Greece, Spain, Italy and elsewhere. As it stands, Europe�s long-term economic potential is harmed by its high structural unemployment rate, which leads to a lower realized economic growth rate and consequently a lower long term return for the stock market. The short-term stimulative effects of quantitative easing should not mask the serious structural challenges that remain in Europe.