The net foreign liability (IIP) of the eurozone countries is also affected because the national central banks have to borrow from the eurosystem.
The only growth in the eurozone is coming from inventories from the non-financial sector, but they got a bit ahead of themselves, and are now levelling off. The eurozone governments are only contributing 0.3%, 0.3%, and 0.2% to GDP for the last 3 quarters. The saving rate of households in the euro area is 15% of gross disposable income and has remained relatively constant throughout the last decade.
The euro areas growth of 3% cannot be maintained if the household sector pulls in their spending.
Contributions of expenditures by sector to the growth of nominal GDP in the euro area
2010 Q2 Q3
Households 1.4, 1.7
Non-financial corporations 1.8, 1.3
Financial corporations -0.1, 0.1
Government 0.3, 0.2
Net exports -0.4, -0.3
GDP 3.0, 3.0
Warren, on the last slide you show japanese vs chinese us treasury holdings with japans holdings going higher and china’s flattening out. you have maintained that china’s treasury holdings is more of a function of the us buying their stuff and giving them us$ and they simply switch the us$ from noninterest bearing to interesat bearing (us treas) accounts. how can one tell which is effecting treas holdings more, them buying us$ (to strengthen currency and impove their ability to export) or them selling us stuff to get us$?