The Eurozone is a polarise economic model.

Discussion in 'Economics' started by morganist, Apr 24, 2012.

  1. This was last year's news, ie Krugman - Origins of the Euro Crisis

    International Finance classes are probably using this crisis as a real time example of the failures that can arise in a currency union.
     
  2. Yes but you could argue that the explanation I gave provided a reason for why the situation will deteriorate further and become more polarised. Plus I backed up the argument with data.
     
  3. I had a look at that article but I didn't see it claiming the aggregated currency value caused the trade deficit. This is something I strongly argue and then conclude that the trade deficit was as a result of this. The article you posted is the other way round and I don't think it addresses the impact of the aggregate currency value as a polarising factor that will deteriorate over time.

    In short it states there is a trade deficit but doesn't fully explain why it happened or why it will get worse, which I believe my article does.
     
  4. What you're calling the trade deficit has a more specific term, current account deficit.


    Spain:

    <IMG SRC=http://research.stlouisfed.org/fred2/data/CUAEEFESQ052N_Max_630_378.png>
    They may have realized the problem and things are self correcting.

    For Italy:

    <IMG SRC=http://research.stlouisfed.org/fred2/data/CUAEEFITQ052N_Max_630_378.png>
    Ain't a damn thing changed and is problematic.


    Greece is out this morning projecting a worse 2012 GDP forecast but a better currenct account deficit for the year.

    Things could get worse but no one knows. At least the CA's are improving for some of the problem countries.
     
  5. I would argue that is only because of the investment from the rest of the Eurozone.

    The point I am making is the reason behind the deficit and how it is likely to deteriorate. The strong will become stronger and the weak will become weaker.