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>A primary deficit which financed import orders for the German export industries.<

Do really want to argue that Greece has exactly one trade partner?

by IM on Sun Feb 19th, 2012 at 04:25:31 PM EST
[ Parent ]
Trade: Exports (2010): $22 billion: manufactured goods, agricultural products, beverages, tobacco, petroleum products, cement, chemicals. Major markets--Germany, Italy, Cyprus, Bulgaria, Turkey, U.K., France, U.S., Romania, Spain. Imports (2010)--$64.55 billion: basic manufactures, food and animals, crude oil, chemicals, machinery, transport equipment. Major suppliers--Germany, Italy, China, France, Netherlands, U.S., Russia.
(US State department)

Assming the countries are listed in decreasing order of importance, Germany is both Greece's leading importer and exporter. Now we just need to find a source for the actual amounts.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:31:04 PM EST
[ Parent ]
With bilateral trade worth more than EUR 8.5 billion, Germany is Greece's principal trading partner. German companies are among the most important foreign investors in the country. Over the past two years, Deutsche Telekom has gradually acquired a 40 per cent share in the semi-state-owned Greek telecommunications company OTE. In addition to companies including Siemens and Bayer that have been operating in Greece for many years, there has been a recent increased influx of retail companies like Lidl and Media-Saturn. Major infrastructure projects such as the Athens Metro and the new Athens airport have been conducted with the help of German companies. The 144 German companies operating in Greece employ a total workforce of approximately 37,000 and account for an annual turnover of some EUR 10.5 billion (German Federal Bank figures, as of April 2010).
(Auswärtiges Amt)

Nice how they give the gross amount of bilateral trade, but not the net.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:36:50 PM EST
[ Parent ]
It has three trading partners who are abusing the European fixed exchange rate system for protectionist gain.

Of those three, one is Germany and the other two (Finland and the Netherland - and Finland's inclusion on this list is actually questionable) are an order of magnitude (and some small change) smaller. As trade scales faster than linearly with size, Germany is well in excess of 80 % of the trade imbalance.

So for all practical purposes, yes, Greece's primary deficit went to German export companies.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 04:39:15 PM EST
[ Parent ]
The percent of total German exports going to the Euro area as a whole has actually declined since the euro was introduced because the Euro area has grown more slowly than other regions. Germany's bilateral trade balance in goods with each of the GIIPS, however, has improved. For example, Greece's bilateral trade deficit with Germany widened from -1.5 percent of Greece's GDP in 1999 to -2.5 percent in 2008. Other core European countries, like the Netherlands, saw similar developments with the GIIPS, suggesting that all of the surplus countries benefited from increased demand in the weaker Euro area members.
(Carnegie Endowment)

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:41:53 PM EST
[ Parent ]
Foreign Affairs: Why Only Germany Can Fix the Euro (November 17, 2011)
First, rather than providing peripheral countries with a market for their distress goods, the Germans have been enthusiastically selling their manufactured goods to the periphery. According to Eurostat, Germany's trade surplus with the rest of the EU grew from 46.4 billion euro in 2000 to 126.5 billion in 2007. The evolution of Germany's bilateral trade surpluses with the Mediterranean countries is especially revealing. Between 2000 and 2007, Greece's annual trade deficit with Germany grew from 3 billion euro to 5.5 billion, Italy's doubled, from 9.6 billion to 19.6 billion, Spain's almost tripled, from 11 billion to 27.2 billion, and Portugal's quadrupled, from 1 billion to 4.2 billion. Between 2001 and 2009, moreover, Germany saw its final total consumption fall from 78.5 percent of GDP to 74.5 percent. Its gross savings rate increased from less than 19 percent of GDP to almost 26 percent over the same period.


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 05:11:04 PM EST
[ Parent ]
Not that you'll care, but I'd appreciate it if you used fewer rhetorical questions and more links to sources in debates.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:57:21 PM EST
[ Parent ]
If you don't care, why should I care?

I do overuse rhetorical questions, but I really don't think that matters . A assertion without a question mark is not really much better.

Now , according to the statistical annex of the OECD economic outlook report 90,

http://stats.oecd.org/Index.aspx?DataSetCode=EO90_INTERNET

Greece had a current account trade deficit of 14.9% in 2008. In absolute numbers 51.2 billion $. The trade deficit was 49,1 billion $. Now as big as 2.5% of gdp is, that is not everything and certainly not 80% of the total.

by IM on Sun Feb 19th, 2012 at 05:19:52 PM EST
[ Parent ]
In the Eurozone as a whole, there are five surplus sinks: Germany, the Netherlands, Austria, Luxembourg and Finland.

The rest are surplus sources, and the external account is balanced.

Therefore, any surplus generated by the deficit countries will eventually find its way to the five surplus sinks.

Germany is larger than the other four by a factor of what? Four? Five? Something like that, anyway.

The fact that the Greek sovereign primary deficit passed through Italy before ending up at Siemens and Rheinmetall AG is of no consequence to the conclusion that it did, in fact, end up there.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 05:37:14 PM EST
[ Parent ]
We follow this logic the greek primary deficit financed chinese exports.
by IM on Sun Feb 19th, 2012 at 05:55:06 PM EST
[ Parent ]
No, the Eurozone has balanced foreign accounts.

RoW is not a surplus sink for the Eurozone, which means that none of the money the Eurozone's members pay for import end up in China.

The notion that "China is bankrolling Europe" is American conventional wisdom that you're puking up as if it were fact.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 06:05:46 PM EST
[ Parent ]
The notion that "China is bankrolling Europe" is American conventional wisdom that you're puking up as if it were fact.

I said nothing of the sort. Don't make things up.

I cuold have used Ireland. Or the Netherlands. But countries with a considerable trade surplus with Germany. Or Japan.

by IM on Sun Feb 19th, 2012 at 06:10:15 PM EST
[ Parent ]
No.

The Eurozone has balanced foreign accounts. RoW is therefore not a surplus sink for the Eurozone. RoW not being a surplus sink, and China belonging to RoW, China cannot be a surplus sink.

This is elementary graph theory. So elementary, in fact, that you can prove it simply by drawing a graph with the nodes "Greece," "rest of Eurozone" and "Rest of World."

Then impose the boundary conditions that inflows must exceed outflows for Greece, and that all in- and outflows to RoW must sum to zero.

The only sink in that graph is RoE. China is not in the Eurozone, and is therefore not a sink.

Q.e.d.

This has been your first and last fee lesson in elementary graph theory. If anything here is unclear, look it up before venturing into discussions of international trade again.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 06:25:41 PM EST
[ Parent ]
That, as so often from you is nonsense. Even after we factor out the eurozone, Greece is not running a balanced trade account with the rest of world.
by IM on Sun Feb 19th, 2012 at 06:30:51 PM EST
[ Parent ]
sigh

The Eurozone is running a balanced trade with RoW.

That means that the Greek deficit cannot end up in a sink outside the Eurozone. It. Is. Not. Possible.

As long as the Eurozone as a whole is running balanced foreign accounts, all Eurozone countries' aggregate deficits must end up as surpluses for other Eurozone countries.

This is not a difficult concept to grasp, so I really don't see why you continue this obtuse insistence that German surpluses are not the problem.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 06:47:53 PM EST
[ Parent ]
You keep (deliberately?) forgetting Greece is part of a currency union with aggregate balanced external trade.

Greece doesn't have a problem with its debt in Yuan either.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 06:06:28 PM EST
[ Parent ]

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