The euro wage bubble

There are several big bubbles driving the global economy and its financial markets. There are the twin bubbles of US household debt and house prices, driven by easy money. And there is the Japanese government bond bubble, fed by excess savings and cheap credit. But the next great bubble in the world is continental European (principally German) labour. This euro wage bubble is sustained by sticky prices and state subsidies.

There are several big bubbles driving the global economy and its financial markets. There are the twin bubbles of US household debt and house prices, driven by easy money. And there is the Japanese government bond bubble, fed by excess savings and cheap credit. But the next great bubble in the world is continental European (principally German) labour. This euro wage bubble is sustained by sticky prices and state subsidies.

One by one, these bubbles will eventually burst.

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