Leading the PIIGS to Slaughter

[bcassill]

Interesting article from Naked Capitalism. Basically says that the world is screwed by laying out the catch-22 trade-offs countries face in managing collapsing tax revenues, higher deficit spending, falling wages, and exploding current account deficits. On top of all of it is the large debt overhang of developed economies. Essentially, there are no good options. Very informative read.

Parenteau: On Fiscal Correctness and Animal Sacrifices (Leading the PIIGS to Slaughter, Part 1)

[jneal3]

Re: Leading the PIIGS to Slaughter

Just read part 2: the PIIGS (and maybe our near-future?) predicament is summed up nicely with:

The underlying principle flows from the financial balance approach: the domestic private sector and the government sector cannot both deleverage at the same time unless a trade surplus can be achieved and sustained. We remain hard pressed to identify which nations or regions of the remainder of the world are prepared to become consistently larger net importers of Europe’s tradable products. Pray there is life on Mars that consumes olives, red wine, and Guinness beer.

The entire article (parts 1/2) is well worth the read for the non-pros like me.

Wonder if the recent babbling from the White House about increasing exports is a result of someone in there having reached the same conclusion about the U.S. economy.