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Goldman Sachs: Reducing Wages in Periphery Is Not Enough

Wage Reduction Not Sufficient NIIP

Reducing wages Not Sufficient European periphery

The must-read Goldman Sachs analysis on Zerohedge that states that it is not sufficient to reduce wages in Greece or Spain (and even France) and that these countries will see lost decade(s) because instead of nominal wage reductions many workers are fired. It is completely in line with our analysis that production costs rise more quickly in the periphery than in Germany despite falling real wages. Furthermore they explain that, similarly to Churchill’s and Brüning’s commitment to the gold-standard, austerity and the construction of the european currency forces nominal or at least real wages to fall and inflation to remain low. Here our synthesis that a Northern Euro would reduce European and global imbalances, suffering in the periphery and investors’ fear.


George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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