Wednesday, June 27, 2012

The German bubble

Bubble economies are abundant nowadays in the Western world. And Germany is held for us as one of the few non-bubbles. But is it?

Germany's export success depends to a considerable extent on a low euro and South European countries with trade deficits. But that is an unsustainable situation. Germany is already paying a lot for it in the form of loans that may never be paid back. The fact that that isn't taken into account is problematic in itself. And it may become much worse when that happens what many have been fearing for a long time: a burst of the eurozone.

Not attacking problems when they are small is one way that bubbles happen and the euro is a classical example of that.

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