Re:Italy’s teetering banks will be Europe’s next crisis
by sergiosgc on Monday July 11, 2016 @07:42AM
(#12070356)
Runaway balance of trade deficits and superavits. If a country consistently runs a trade superavit, it will, in infinity, suck all other countries dry of money.
Traditionally this is compensated by currency fluctuation. The Deutsche Mark rises, cancels German advantage against French exports and the trade balance evens out.
The euro prevents this correction mechanism.
The US largely uses investment flows as a compensation mechanism, mostly via the industrial military complex. Europe has no such military, but must come up with some type of investment flow to counter trade imbalances.
As it is now, we have fines. Germany is in line to be fined for having too much of a trade superavit (idiotic fine, which won't happen anyhow)
Traditionally this is compensated by currency fluctuation. The Deutsche Mark rises, cancels German advantage against French exports and the trade balance evens out.
The euro prevents this correction mechanism.
The US largely uses investment flows as a compensation mechanism, mostly via the industrial military complex. Europe has no such military, but must come up with some type of investment flow to counter trade imbalances.
As it is now, we have fines. Germany is in line to be fined for having too much of a trade superavit (idiotic fine, which won't happen anyhow)