When policy is reversed it takes longer for recovery

EVERY few months when the Spanish government announces the latest batch of economic and debt data, these numbers always turn out to be worse than expected and much worse than originally projected.   Ironically, this is exactly what we should expect under the circumstances. Foreign minister Jose Manuel...

No one big enough to reverse the spiral

THERE are two reasons why I am certain Spain will leave the euro. Or, which amounts to the same thing, that Germany will leave the euro instead of Spain. I specify Spain because it is the country in which I was born and grew up, and so it is also the country I know best. However, I really mean all the...

The Economist sees (and raises) my bet

The Free Exchange blog at The Economist has accepted my bet that China’s dollar GDP will not surpass that of the US in 2018 (EWN 1396) , and very cleverly they have added a second one. For two years I have been arguing that a Chinese rebalancing will require much slower GDP growth rates than we currently...

I would like to make a bet with The Economist

I recently read in The Guardian an article by enthusiastic orientalist Martin Jacques in which he says that The Economist has just predicted that China’s GDP, measured in nominal dollars, will be the world’s largest by 2018. Earlier estimates, he says, had China becoming the largest economy in the world...

When should imbalances reverse?

Continued from here THE historical precedents suggest that Germany will not take steps to reverse the trade surplus. Countries that run large and persistent trade surpluses never seem to understand that their surpluses are mainly the consequences of domestic policies that generate additional domestic...

If no trade reversal now, then when?

EUROPE’S underlying problem is not budget deficits or even unsustainable debt. These are mainly symptoms. The real problem with Europe is the huge divergence in costs between the core and the periphery – in the past decade costs between Germany and some of the peripheral countries have diverged by...