If a week is a long time in politics, then a month in economics is an eternity.

Today, Bernard Keane and Glenn Dyer compare the RBA notes from last month to this month. For November:

“Financial markets have recovered somewhat from the turmoil of recent months, helped by stronger economic data in the United States and by signs that European governments are making progress in their efforts to deal with the sovereign debt and banking problems …”

And yet, even with this morning’s confirmation of the health of the local economy via new GDP figures, check out Glenn Stevens’ comments for December:

“The sovereign credit and banking problems in Europe, to which European governments are still seeking to craft a full response, are likely to weigh on economic activity there over the period ahead. Financial markets have experienced considerable turbulence, and financing conditions have become much more difficult, especially in Europe. This, together with precautionary behaviour by firms and households, means that the likelihood of a further material slowing in global growth has increased. Commodity prices have reflected this, declining further over recent months and taking pressure off CPI inflation rates. This has increased the scope for some easing in monetary policy in a number of countries.”

This is the crucial week for what was once a European financial crisis but which is now a crisis of the Euro currency and ultimately of the Eurozone itself. Despite the summits and reform plans, there remains the lurking feeling that no one has the fiscal firepower to really fight the crisis effectively. There simply isn’t a bazooka big enough in Europe, and no one else is prepared to lend one, for all that the world knows how much is at stake.

As Europe scrambles to save the euro, we may well see more and deeper cuts from the RBA in the near future. The news out of the EU isn’t about to get any rosier.