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Trouble is, we can't all be net exporters...
It is becoming clearer by the day that, under the current institutional constraints, the policy imperative for a country such as Spain would be to reduce its trade deficit as quickly as possible.

However, to turn an economy with a structural trade deficit (a net importer) into a net exporter in the absence of strong devaluation requires public support for import-substitution industries. And reindustrialisation. Both of which are contrary to stongly held EU policy principles best summarised as "no illegal state aid".

So, in the absence of

  • an independent exchange rate policy
  • an independent fiscal policy
  • an independent monetary policy
  • fiscal support from the ECB
  • state aid to reindustrialization

how THE FUCK is Spain supposed to turn from a net importer to a net exporter?

And how well would Germany take it if Spain embarked on a push to reduce its trade deficit with Germany? No mercantilist country takes well to its customers deciding to buy less of their stuff.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Migeru (migeru at eurotrib dot com) on Fri Nov 5th, 2010 at 11:50:00 AM EST
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