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Fair points. I don't think I ever fully believed in "decoupling" anyway. And there are certainly credit restrictions in France (if "crunch" is overstated), and that in its turn is squeezing new home construction.

But Vittori seems to be suggesting European banks got hold of the most toxic waste around, and were almost suffering more than American banks. It depends somewhat, probably, on what circumference is "European": he seems to me to be counting in the UK when it suits him, jumping to the eurozone at other times. Likewise with exports, he picks up on France but forgets Germany.

It's really the question of comparing GDP growth US v Europe again that gets me most, though. When things are OK, we hear the US is zooming ahead. When that's not the case, and some of that extra US growth looks pretty much clearly exposed as slimy froth, we have to hear as a negative point that we have about the same growth rate.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Aug 26th, 2008 at 01:38:39 PM EST
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It's interesting that he points to population growth but doesn't mention the dirty secret:

If the US has more population growth, that means it needs more GDP growth to sustain the same standard of living. (Krugman commented on this recently, but I can't find it right now.)

If you include UK banks and UBS (Swiss) then the European banks did get some serious toxicity.

[Of course all the usual caveats about GDP growth and hedonic indexing still apply.]

by Metatone (metatone [a|t] gmail (dot) com) on Tue Aug 26th, 2008 at 02:22:33 PM EST
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I suppose the response to the first point would be: compare per capita GDP. (Though I don't think he's doing that).

On the banks, as I said, it depends on the perimeter you apply. Switzerland and the UK are special cases. He's no doubt counting them in so he can labour that particular bad point for Europe.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Aug 26th, 2008 at 03:25:57 PM EST
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