Thursday, October 31, 2013

Economic Halloween skeletons in the glass house

Germany's record exports are being criticized in the latest US "Report to Congress on International Economic and Exchange Rate Policies".

The statement "Germany still continues to rely on positive net exports, which continues to delay the euro area's external adjustment process" is the most interesting statement a quick read by the K-Landnews Random Research team has singled out.

Other than the fact that it is an opinion and not completely correct, the statement reflects a deeper conceptual issue everybody, not just the U.S., faces when they talk about the euro zone economy.

Where do you draw the conceptual boundary between the member states as individual states and the euro zone as an economic unit?

If you take the euro area as an economic unit, there is no problem or, if you must see problems, a slightly different problem.

Don't believe it?

Try this sentence: "California still continues to rely on positive net exports, which continues to delay the dollar area's external adjustment process".

If you still do not understand the point we are trying to make, well, let's agree to disagree.

We'll go back into the glass house to carve pumpkins for Halloween.



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