It's summertime and the livin' is... (fill with adjective best describing your situation.) The European Central Bank (ECB) has gone into a wait and see mode, leaving main interest rates unchanged and forecasting a return to mild inflation after Eurostat had issued a 0.1% deflation figure for June.

According to the introductory statement delivered by ECB president Jean-Claude Trichet after the monthly rate setting council meeting on Thursday markets have somehow stabilized, but he intoned in the Q&A session I followed via webcast that all his estimates are only valid for the moment, meaning any exogenous or systemic shock could change the picture any day.

As always he repeated his mantra that the ECB stands on 24-hour guard to react quickly in case of the next black swan event.

M3 Growth for First Time Below 4.5% Reference Rate

Being complacent with the fast slowdown in money supply M3 growth to a mere 3.7%, the first time in the history of the Euro that annual M3 growth has descended below the 4.5% reference rate, Trichet concluded that:

A cross-check of the outcome of the economic analysis with that of the monetary analysis corroborates the assessment of low inflationary pressure, as money and credit indicators continue to be weak. Against this background, we expect the current episode of extremely low or negative inflation rates to be short-lived and price stability to be maintained over the medium term, thereby continuing to support the purchasing power of euro area households.

I'll leave it here. For the time being the ECB can collect a good performance grade for keeping official inflation at bay.
But my fears that this will be the last summer doldrums for a while cannot disappear after I just had an interesting chat with a source in Slovakia, since this year the 16th EU nation to transact in Euros, who said the industry there is not declining but simply falling apart.

Latvia and Estonia may be only the prelude of an economic apocalypse potentially engulfing all of Europe.