Saving Greece, Europe, and the United States

Greece, Spain, Portugal, Italy, France, and the U.S. are close to bankruptcy, and they all have the same problems: profligate government, large trade deficits, and bewildered economists. Moreover, the G8 statement was ruling out any real solution to the huge unemployment problems of the Southern Eurozone. All of the Eurozone countries with high unemployment rates have negative trade balances (as measured by current account balance divided by GDP), and all the ones that are doing well have positive trade balances. Furthermore, the worse the trade balance, the higher the unemployment rate as shown in the graph below. This is not surprising from an economics standpoint.  Trade surpluses add to demand, while trade deficits subtract.  Also, when a country has structural trade deficits, attempts to stimulate demand through profligate government spending leak abroad. In the chapter about mercantilism in his magnum opus (The General Theory of Employment Interest and Money), John...(Read Full Article)