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One or more members will have to exit the euro zone to restore competitiveness
Howard Richman, 5/12/2010

In his April 29 posting on this blog (The Greek Crisis Reveals the Fatal Weakness of the Euro and Gold Standard), my father pointed out that the euro fix ignores the underlying cause of the crisis, the trade deficits in Greece, Portugal and Spain.

Nouriel Roubini apparently understands this dimension of the crisis. In an interview with Bloomberg, he repeatedly predicted that within the next several years, one or more members of the euro zone would have to withdraw in order to restore their competitiveness. Here's the interview:

Overall, Roubini's analysis agrees with ours. The underlying debt problem stems from trade deficits. Transferring debt from the private to the public sector, without addressing the trade deficits, just makes the public sector insolvent.

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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]