Last week I got a reply from the European Commission to a previous e-mail (also reproduced in this blog here). Before reading the reply it might be useful to understand that I was trying to point out the inconsistency of ignoring that three sectoral balances cannot simultaneously reduce their net financial balances. OK, I agree that some imbalances may be cause for concern. But it doesn't make sense to be concerned about all of them simultaneously.
I was also trying to remark on the really critical imbalance in the EU: the enormeous trade surplus of Germany. Yes, they acknwledge that it deserves attention. However, they do not seem to be concerned about the fact that Germany is running a fiscal surplus in 2015. Well, if you are concerned about the German trade surplus you'd better be equally concerned about the fiscal and private sector surpluses since they are inextricably linked. I was hoping that the EC would acknowledge that they should, perhaps, consider changing their alert mechanism and start by flagging the German Government surplus.
It is worth pointing out that the fact that there is a link between Germany's trade surplus and the weak internal demand in that country does not equate to causation. I think that it is worth the EC's time to analyze the cause of underinvestment and low spending in that country rather than building nifty macroeconomic scoreboards.
I do promise to read their in-depth study of the German economy today.
Herewith is the reply of the European Commission to my recent inquiry regarding the Alert Mechanism Report:
I was also trying to remark on the really critical imbalance in the EU: the enormeous trade surplus of Germany. Yes, they acknwledge that it deserves attention. However, they do not seem to be concerned about the fact that Germany is running a fiscal surplus in 2015. Well, if you are concerned about the German trade surplus you'd better be equally concerned about the fiscal and private sector surpluses since they are inextricably linked. I was hoping that the EC would acknowledge that they should, perhaps, consider changing their alert mechanism and start by flagging the German Government surplus.
It is worth pointing out that the fact that there is a link between Germany's trade surplus and the weak internal demand in that country does not equate to causation. I think that it is worth the EC's time to analyze the cause of underinvestment and low spending in that country rather than building nifty macroeconomic scoreboards.
I do promise to read their in-depth study of the German economy today.
Herewith is the reply of the European Commission to my recent inquiry regarding the Alert Mechanism Report:
