An interesting presentation about today’s economy

In this interesting and easy-to-understand presentation, Professor Arturo Bris from the IMD business school in Lausanne, Switzerland, explains the latest economic evolutions in the world:
– what is happening in the US from an economic perspective
– the effects of the quantitative easing on the economy and on the finance industry
– an analysis of the PIIGS (Portugal, Italy, Ireland, Greece, Spain) countries which encounter serious difficulties with their sovereign debt.

The key take-aways for me were:
– the ration debt to GDP that is shown in every explanation of the Euro crisis is not an efficient indicator to measure how endangered a country is with its own sovereign debt. It all depends on his capacity to reimburse his creditors.
– Germany benefits from the sovereign debt crisis of the PIIGS crisis, but Angela Merkel must be careful with the German public opinion not to give the impression to bail out the other countries’ mistakes with German taxpayers money… tough task !

One remark : the USA can afford to have a weak dollar to export, since the oil, which in industrialized countries plays a critical role in imports, is payed in dollars. They don’t have the currency effects that affect other countries. This system will be beneficial to them as long as investors trust the value of the dollar. Will it always be the case ?

Finally, I have one question: Professor Arturo Bris states that the PIIGS countries, since they are net importers (i.e. with a negative trade balance), have an interest in a strong euro. But if the main providers of Spanish imports are already in the Euro zone, a strong Euro would not make a difference. Wouldn’t it ? And wouldn’t a weak Euro help increase the inflation and hence reduce the debt burden that the PIIGS country have to carry ?

Any input appreciated 🙂

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