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French growth is driven by consumer spending (coming both from wage increases and more debt), which drives up (slightly) the trade deficit, and this is worrisome, a sign of loss of competitiveness.
US growth is driven by consumer spending (coming exclusively from icnreased debt), which drives up (massively) the trade deficit, and this is great, a sign of dynamism.
Can someone explain? In the long run, we're all dead. John Maynard Keynes
But it is indeed a real problem - indeed one that Germany faced in 1999 when it joined the euro at an overvalued rate for the DM: several years of below-par growth as the economy had to "sweat out" the slight overvaluation. But that was pushed to such an extreme that wages did not move at all, while profits increased dramatically. Now German companies are extremely competitive again, but the economy is only benefitting partly.
It's always a fine balance between the need to increase competitiveness and sharing the benefits of this competitiveness, which relax the impetus to increase comeptitiveness, the way the system is rigged now. In the long run, we're all dead. John Maynard Keynes
This raises the Purchasing Power of the Euro absolutely as well as relative to the dollar. She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
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