Chpt. VIII: The Queen’s Croquet-Ground

Views From the Marsh - David Owen

“I don’t think they play at all fairly,” Alice began, in rather a complaining tone, “and they all quarrel so dreadfully one can’t hear oneself speak—and they don’t seem to have any rules in particular; at least, if there are, nobody attends to them—and you’ve no idea how confusing it is all the things being alive; for instance, there’s the arch I’ve got to go through next walking about at the other end of the ground—and I should have croqueted the Queen’s hedgehog just now, only it ran away when it saw mine coming!”

Alice’s Adventures in Wonderland, Lewis Carroll, 1865

As we highlighted in our post last Friday, the US is not, as is often suggested, in large deficit with the euro area; if one includes services, the US was in current account balance with the euro area last year (“What will Europe do next?” see here).

Moreover, the US is highly reliant on international capital inflows to finance its very large twin deficits, much of it courtesy of the euro area (see chart).