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(This whole usurious debt is nonsensical. Greece still pays whatever interest rate it did got quite prior to the crisis on most of its debt. Even you can't assume that the new interest rates have already influenced its CA.)
Wait a moment. You are saying all the time that everything depends on CA deficits. But whatever, lets say it was only 8.0% in 2007. So what?
"You are using a snapshot of different points in the business cycle to say something about the relative magnitude of structural variables. That's nonsense."
Of course it is nonsense! Tell that to Migeru and his famous table! Tell that to your reflection in the mirror!
But lets talk about structural CA deficits. All I claimed is that structural CA deficits in Italy and France - not to talk about Ireland and Belgium - are low. A lot lower than in Spain and Greece and Portugal. Isn't that a bit of a problem to your CA hypothesis?
No, the prediction is that the endgame in all this is that all the deficit countries including France will end up on the other side of the fracture from Germany when the Euro blows up. (Cue in the discussion of Jerome's Niemöller moment)
The only reason why France migth be included in "core Europe" is the political prejudice of the Francogerman axis, but if France insists on hoisting itself to a new faux gold standard alongside Germany and the Netherlands, their economy will first suffer a private debt bubble and then get blown out of the water in the next business cycle. Economics is politics by other means
"all the deficit countries"
I still claim that calling a country with a CA deficit of 0.1 gdp and a country with 10.00 of gdp both deficit countries doesn't make sense.
If you don't believe me, just derive the convergence criterion yourself.
- Jake Friends come and go. Enemies accumulate.
(This whole usurious debt is nonsensical. Greece still pays whatever interest rate it did got quite prior to the crisis on most of its debt.
That is an extraordinary claim - you are arguing that the bulk of Greek foreign debt had a maturity greater than two years in 2009. I find that very difficult to believe, but perhaps you are better informed?
Structural CA deficits. And more like 5 %, since in 2007 the ECBuBa hadn't destroyed a quarter of the Greek GDP yet.
Of course it is nonsense! Tell that to Migeru and his famous table!
I did. You missed the part where I noted that Ireland did not belong in the table?
Oh right, you didn't. You used it to play silly gotcha games with Mig.
No. Italy has had a cycle-averaged nominal GDP growth in the ballpark of 3 % of GDP, and a structural CA deficit in the ballpark of 1½ % of GDP, and the ECBuBa is targeting a "long-run" overnight rate in the ballpark of 1-2 %. This is at risk of blowing up if the average markup over the risk-free rate exceeds 1½ percentage points for any length of time.
If the banks that are lending to Italy are gearing 10:1 and require 7½ % nominal return on their equity, then all other overheads can amount to no more than 75 basis points before the whole edifice becomes unstable.
OECD numbers. I don't know what is the structural deficit but it seems to be lot larger then in Italy or France or indeed even Spain.
I asked Yanis Varoufakis point blank if he had any internal insight into official Eurostat/OECD numbers and the Greek economy. He replied that the numbers were absolutely not to be trusted. Greece neither reported them accurately, nor did Eurostat seem to care.
It's the foreign debt (public and private) that's relevant for the CA imbalance, not the sovereign.
I would be very surprised if the average maturity was not substantially shorter on the total foreign debt than on the sovereign debt.
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