terça-feira, junho 23, 2015

It's the external imbalance, ...

An interesting article in the DW in Portuguese presents the numbers of the Eurozone crisis less clearly than one would expect.

The analysis is interesting and very well presented, but strangely incomplete.  It's as if economics students simply skipped the class in trade theory and international finance.

How can we understand the Eurozone crisis without looking the the external imbalances among the member countries, the huge deficits and the huge surpluses in the Current Account of the Balance of Payments ?
If you overlook this  key indicator of divergence in the Eurozone, you risk making the wrong diagnosis, thus promoting the wrong, and ineffective "solution".

To understand where the Eurozone is headed, not just Greece, we need more Kenen and Kindleberger and less Kafka.   Unless you consider the Kafkaesque asymmetric world view that  Current Account surpluses are virtuous and Current Account deficits are immoral, even when they are financed by suppliers credits from the surplus countries.

Please see more in this blog PPP Lusofonia for a view from the debtor side.
Do use the translate button.

Mariana Abrantes de Sousa
PPP Lusofonia
See also
Munchau on ordoliberalism
Krugman on Kenen
Becker on the Eurozone crisis