quinta-feira, agosto 22, 2013

The Economist of 3-August-2013 says that the Netherlands are turning against the EU.
Here is an exchange of comments: 

Trends in GDP per capita are certainly important, but the divergence that really matters is in the external accounts. For example, NL maintains a record CAB/GDP, much of it within the EU. 
And they've reportedly turned eurosceptic? Such belly aching.
If their record agricultural exports met with renewed import tariffs, they might be more sympathetic with the workers of the net importing countries who've lost their jobs.
A bit more X-M international economics and a bit less facile north-south "politics", would be highly appreciated.

The Dutch current account surplus is even bigger than you think:
The Dutch current account surplus is 10.1% of GDP - far above Germany's 7.0% surplus, Sweden's 6.9% surplus, Denmark's 5.3% surplus or Ireland's 5.0% surplus.
But these surpluses are not with the rest of the EU (and certainly not with the eurozone). Italy and Spain had very modest deficits in 2012; Italy will be in surplus this year and Spain's on track for a surplus next year. Rather, these surpluses are held viz-a-viz the rest of the world.
Trade barriers have nothing to do with it; restrictions to trade would make us all much poorer than we are. Rather, the massive trade surpluses in the Netherlands, Sweden, Denmark and Ireland are caused by rapid private sector deleveraging, massive capital outflows and domestic businesses investing their profits in other states.
Three points:  
1. Even apparently small CAB inbalances, surplus/deficits can be unsustainable in a customs/currency union like the Eurozone, where small fragile economies are rammed by their stronger partners and have none of the traditional adjustment mechanisms.  The only sustainable intra-Eurzozone CAB position over the long term is something very close to zero. 
2. In my experience, the causality between the current and the capital accounts runs the other way: big CAB surpluses lead to big capital outflows, what used to be called "recycling petrodollars".  Eventually, these capital outflows turn into loan losses. 
3. There are clear winners and losers in the EU/Eurozone experiment, so the Dutch should probably be counting their blessings.