Friday, May 25, 2012

Don't Sweat the Crises in Europe and China

U.S. has limited exposure to downturns in Europe and China.

In Europe, if you tally imports and exports for the 17 countries using the euro, and you will find that they roughly balance, with deficits in countries like Spain offset by surpluses in other countries—primarily Germany, reports WSJ.

To the degree exports are heading out of Europe, they are headed to China. China has been a major destination for European exports in general, and German exports in particular. As it has rapidly built up its ghost infrastructure and industrial base, China has been heavily buying equipment from Germany. Last year, Germany exported €48 billion (about $60 billion at today's exchange rates) in machinery and transportation equipment to China, according to the European Union's statistics agency. That accounted for 11% of Germany's exports to countries outside the euro area. This means China's domestic problems could be magnified by the problems in Europe.

The U.S. exported $123 billion in goods to China last year, according to Comtrade, the United Nations trade statistics database, versus Europe's $178 billion, but much of the U.S. exports were more consumer oriented than the capital good exports out of Germany and thus are less likely to be impacted by a capital structure crisis in China.


  1. Epj. The solution is austerity. See facts from Estonia and Sweden. This is a secret the Keynesian media refuse to tell.

  2. @anon 11:32
    that is no kind of article at all, just a series of lines clipped from press releases about a minor member of the EU. you could change the date to 2005 for instance and choose Ireland which would be in 'vanguard of capitalism'.

  3. What about banking ties? Isn't our Fed and its subsidiaries invested in the Euro mess?

  4. Heath.

  5. Robert, Agreed if you only look at imports and exports you could say that US has limited exposure to the crises in Europe and China, but if you look at the derivative exposure to Europe by the biggest banks, it's a whole other story!!!