Gyroscopic Investing

I came across this article through Marginal Revolution but didn't really find any satisfying answers.

http://marginalrevolution.com/marginalr ... -this.html

Anyone here have any idea how this could be happening?

Pointedstick wrote: Anyone here have any idea how this could be happening?

Low current productivity vs previous spending.  Monetary velocity is still high.

One thought:
Import prices don't care about your economic weakness. We went through a similar thing in the 70s with OPEC.

melveyr wrote: One thought:
Import prices don't care about your economic weakness. We went through a similar thing in the 70s with OPEC.

Ahh, that makes a lot of sense to me, especially because Greece doesn't have a huge amount of domestic industry. So I guess they're being hit with a double whammy of a weak economy and having to absorb increased prices on foreign goods they import.

Yep, a wonderful scissor effect. While they endure income deflation (both wages and welfare state went down), they have to face inflation for all the many imported goods.

When we say the governments aren't households, we should probably exclude countries where micro is primarily at work, like Greece. They have structural issues, too, that get into societal collapse territory.