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This is, I think, a very serious problem.

Many people in the PIGS (i.e. countries with trade deficits) understand that something has to be balanced.

People in countries with trade surpluses (like Germany) see to see themselves as superior.

Obviously some countries can only run structural deficits if others runs structural surpluses: it takes 2 to tango.

Correction has to come from BOTH sides. If one side think it is superior and has nothing to correct, then we have a attitude problem. More insidious, this superiority attitude coming from the Germans.

There is a foul stench of the 30s in the air, in many ways.

PS - I would not have any problem with a "superior" model if it was at least balanced (better than balanced: not very dependent on the exterior for fundamental things like erm... energy or food).

by t-------------- on Tue Apr 13th, 2010 at 05:03:05 PM EST
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We have the same problem with the China/US debate on the savings glut vs. the debt binge.

Also, there was a chance of a balanced international system wat Bretton Woods (namely, Keynes' International Clearing Union) but the US, being then the exporter of last resort, saw fit to take the same position of superiority.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue Apr 13th, 2010 at 05:08:42 PM EST
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