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But who is allowing an undervalued euro? China?
This is what I could not anticipate back in 2012 when I wrote about this: that the rest of the world would tolerate a sustained Eurozone current account surplus. But it has.

Now, isn't it interesting that the trade surplus indicates that the Euro is undervalued when everyone outside Germany was screaming bloody murder about the Euro being overvalued?

This is all leading me to question even more any "hydraulic" (to borrow a term from BruceMcF) reasoning about exchange rates, trade balances and the like. The dynamics are more complicated than that.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Nov 30th, 2014 at 08:22:27 AM EST
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