More about the situation in the EZ and Germany in particular than just Spain. He covers a lot of ground.
He says one particularly curious thing:
Policies in Germany around 2000 aimed at improving Germany’s international competiveness did so by forcing down wage growth and, with it, household consumption growth. For reasons about which I am not sure it seems that investment growth also slowed dramatically, compounding the problem of weak household consumption growth.Seems obvious that lower wages means less aggregate demand which results in less investment with growing unplanned inventory sending a signal to either cut back or find other markets. At this time Germany switched from a deficit to a surplus, expanding exports to offset lagging domestic demand. Germany would not have needed to increase investment in aggregate if it already had the capacity to fill orders in the global market. Investment responds to demand.
China Financial Markets
Some things to consider if Spain leaves the euro
Michael Pettis
1 comment:
The gains in Europe should better align Europe with the conservative governments in the United States, Canada, China, Russia, Africa, Middle East, most of the globe really.
Perhaps now that the elitist liberals are out conservative governments won't have as many sacred totems and will instead focus on fixing the economy and raising levels of employment for the commoner rather than regulating the shape of apples and the curve on bananas and ban driving by diabetics.
Hopefully the trend continues next Fall into US elections and forces Dems out of their conservative encampment and they once again begin to nominate and campaign on liberal ideas rather than being republican light. I'm not holding my breath.
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