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The euro death spiral

December 20th, 2011 · No Comments

Capital flows going the wrong way, anything to stop them?


First, capital flowed from the center to the periphery, creating asset bubbles there. Now that these have imploded, capital flows have reversed, creating terrible problems for the euro zone, a zone that collectively has just a 4% public budget deficit (decreasing to 3% next year, according to the IMF), no external deficit, so it could fund these modest deficits entirely with euro zone savings.

But these savings are not moving where they are needed. In fact, quite the opposite is happening.

From Shareholdersunite on Seeking Alpha

Perverse Capital Flows Create A Euro Death Spiral – Seeking Alpha

Tags: Sovereign debt crisis