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  #21  
Old 08.08.2012, 13:34
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Re: Basic economics question

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Ah yes I'm sorry. So are you suggesting a country should run perpetual budget deficits and sub-par growth and somehow survive by the sole magic of currency devaluation? This must be a very novel concept.
Actually, a country can even survive with perpetual deficits and sub-par (whatever that is, growth rates of other countries are irrelevant for fiscal sustainability) growth without devaluating. That is quite an old, well-known concept.
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  #22  
Old 08.08.2012, 13:38
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Re: Basic economics question

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(Futile to say it - but not particularly looking for advice on the plan - it would be for other reasons than investment)
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Because nobody can seriously answer this question:

So giving a single answer for a question with so many variables really requires a well polished crystal ball.

My bottom line: I would currently not make any huge investments in countries with shaky economies...
You just did My question was basically - do these things ALWAYS correlate, or is it always a multi-factor relationship? You answered

But its not for investment.

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If you are not a Spanish or Portuguese working in CH, then I wouldn't suggest to buy a property in Spain or Portugal, respectively. Otherwise, I think in the long term you can have good return.

Ofcourse, it also depend on the type of property. For example, if you buy a commercial property like a shop it will be different then buying a house or flat. However, my humble choice would always be with investing in a field for future investments.
Its not for investment. We'd like to have another property in this place, so the question is more of a "when" not an "if"
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  #23  
Old 08.08.2012, 13:48
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Re: Basic economics question

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a) Greece and Italy have devalued their former currencies a number of times. Did they "devaluate their way out of debt"?
Greece didn't, but Italy was pretty good at keeping it's industry competitive despite the high demands of powerful unions by simply using inflation and devaluation as a tool to undercut the competition.

To a lesser extent Spain did this too from the 1950s onwards (there was a time before that that the Peseta was not floated against other currencies but that the government held a monopoly on trading currency and more or less dictated whatever exchange rate suited it at that moment). Of course this led to a significant black market and foreign currencies being used under the table. At some point in the 1950s Franco got some new financial advisors who convinced him to float the Peseta and from then on there were regular devaluations. It didn't really stop until the late 1980s.
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