Central banks finally move to lower interest rates, but it is too late. The absence of a new source of demand and investor confidence to offset the drop in the dollar and shrinking American the growth throws world into general depression. On the euro side, the European Central Bank learns the lesson of the U.S. recovery and lowers interest rates to the point where growth accelerates. This signals investors and consumers that European governments and the Central Bank intend to produce faster growth. Maastricht rules are bent to allow budget deficits to grow in countries of particularly high unemployment.
Consumer spending rises and inflation is held in check - reproducing the recent American experience.
Economic growth forecasts are adjusted upward. Manufacturing employment expands. Imports grow along with the general economy. The euro begins to rise against the dollar as investment moves back to Europe. European and U.S. authorities cooperate to manage the gradual decline of the U.S. dollar.