We really had a strange summer. The whole media circus, and to a certain extent markets, clung to a few sparse green shots to decree “the recession over”. Which, according to the latest OECD interim assessment, is technically true: GDP in the EMU is forecasted to increase in 2013 by 0.4 per cent. Can we party, then? Well, no.
It is now almost common knowledge that the roots of the eurozone crisis lie in the growing imbalances between core and periphery. Some blame the lazy southerners, some others point to structural flaws of the single currency. In both cases the current account imbalances that existed between savers and spenders at the outset of the crisis, are to be taken as the trigger. (Looking at current accounts is in my opinion also a way to disentangle the structural imbalances story from the “Berlin View”; but I already discussed this
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