The Exorbitant Burden and The Scariest Graph in The World

CHINA FINANCIAL - Report 17 Oct 2014 by Michael Pettis

Last year I presented in this newsletter what I called “the scariest graph in the world”. It showed how some EU policymakers were expecting Europe to rebalance demand. The graph showed Europe’s current account surplus surging to 2-6% of Europe’s GDP. In the newsletter I argued that this “solution” would guarantee not only continued stagnation in Europe for many years but could prevent recovery in the US or elsewhere.

Last week Deutsche Bank strategist George Saravelos alarmed the world by pointing out that Europe’s $400 billion surplus represented nothing more than a $400 billion...

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