In recent weeks, talk about a budding recovery in the eurozone has gained traction, with key indexes pointing to expansion in the core countries - data that many are citing as evidence that austerity is finally working. Money-market funds from the United States are returning, albeit cautiously, to resume funding of the European Union's bank debt. Even Goldman Sachs is now bullishly piling up into EU equities. But is a recovery really underway?

Cynics recall that a European recovery was supposed to take hold as early as the fourth quarter of 2010, and that every International Monetary Fund projection since then has predicted recovery "by the end of the year". Instead, GDP has collapsed, with the Spanish and Italian economies expected to contract by close to 2 percent this year. Portugal's economy is set to shrink by more than 2 percent, and Greece's output will fall by more than 4 percent.

Moreover, unemployment in the eurozone has skyrocketed to an average rate of roughly 12 percent, with more than 50 percent youth unemployment in the periphery countries implying a long-term loss of talent and erosion of the tax base. And, despite the spike in unemployment, productivity growth in the eurozone is decidedly negative.