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Ireland doesn't belong in that group - it has a structural CA surplus. The current CA deficit is a temporary aberration caused by the usurious seigniorage the ECB is extorting at the moment.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Sep 7th, 2011 at 04:13:38 PM EST
[ Parent ]
Ireland doesn't belong in that group - it has a structural CA surplus.

You don't say. But how does that fit Ireland in your CA deficits are everything model?

by IM on Wed Sep 7th, 2011 at 06:48:23 PM EST
[ Parent ]
Ireland fits in the small country with large internationally active banking sector category alongside Iceland and Switzerland (which, in case you haven't noticed, is in a panic over the spillover from the Euro crisis into the macroeconomic and financial stability of its tiny economy). That's why Ireland's banks blew up in 2008, just like the Icelandic ones and the Belgian (Dexia and Fortis) did.

Oh, and don't forget Cyprus. They're a hedge fund too, and are duly under market attack.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Sep 8th, 2011 at 04:14:54 AM EST
[ Parent ]
No, no. Everything is peachy in Switzerland! They still have their own currency after all and didn't join the cursed euro!

"Ireland fits in the small country with large internationally active banking sector category alongside Iceland and Switzerland"

Yes. Nothing to do with CA deficits.

I didn't mention Cyprus because there seems to be an genuine non-economic reason: the power plant explosion.

by IM on Thu Sep 8th, 2011 at 05:14:32 AM EST
[ Parent ]
Everything is peachy in Switzerland!
Do you really have your head up one of your bodily orifices, or are you trolling?
I didn't mention Cyprus because there seems to be an genuine non-economic reason: the power plant explosion.
Yeah, the "external shock" cop-out of neoclassical economics.

About Cyprus: they have become an offshore appendage of the City of London where the banking sector has grown to 7xGDP. Were that not the case, an accident at a power plant would not have spelt economic disaster.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Sep 8th, 2011 at 05:55:19 AM EST
[ Parent ]
No, no. Everything is peachy in Switzerland!

That remains to be seen, but the Swiss central bank is actually behaving intelligently in this crisis.

They still have their own currency after all and didn't join the cursed euro!

And that is why the Swiss CB still has the power to behave intelligently.

They may not be doing enough, and it may not be possible to do enough. But I wouldn't bet money on that in the way that I would without hesitation bet money on the non-viability of the Spanish balanced budget rule.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Sep 8th, 2011 at 08:43:19 AM EST
[ Parent ]
By noting that "CA imbalances (not deficits) are everything" is not my model. My model is that an unsustainably overvalued currency is the fundamental cause of the attacks on all the countries that were attacked after Ireland.

The structural CA imbalances are evidence that they have an overvalued currency, not the cause of the overvaluation.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Sep 8th, 2011 at 07:12:18 AM EST
[ Parent ]

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