terça-feira, julho 03, 2012

Eurozone tests the limits of divergence - 3

The stakes are getting higher as the Eurozone continues to tests the limits of divergence 

What are some of the key differences between the Eurozone and Newton’s pendulum of action/reaction:
- The balls are not the same size and weight …
- The ties may not bind forwever …
The Eurozone  imbalances  are  NOT  self-correcting  
- And little is being done to actually reduce the external imbalances so that net borrowing countries may actually begin to cut their external indebtedness. 

See Testing the limits of divergence in the Eurozone - 1
See more about the Eurozone crisis in

See also  the excellent article of Paul Krugman on the diagnosis about the causes of  the Eurozone crises: 
- Is the cirisis because of excessive welfare state spending? NO 
- Is the crisis because excessive budget deficits ? NO
- Is he crisis because of excessive balance of payments imbalances ? YES 
The difference is that in a customs and monetary union, a "balance of payments problem" is a catastrophy. Two false diagnosis don't make a right, they make for remedies that kill the patiente. 
Krugman on European Crisis Realities: