Once again, as in the case of America’s international finances, it is easy to deceive oneself about the direction of these intra-European flows. We have a clear map of the economic hierarchy of Europe in our heads. We know where the loans went—Greece, Spain, Ireland. We know that Germany was the main “surplus” and “creditor” nation. So does that mean that Germany financed the credit boom? Certainly it had the largest trade surplus and was thus the largest net exporter of capital. But as far as overall financial flows within Europe are concerned, that simple mental map is as misleading as the
...more
