Record Increase In Euro Area CA Surplus

A combination of austerity measures and a weak euro contributed to the biggest strengthening of the euro area current account balance in a long time in June , perhaps the biggest ever. Between June 2011 and June 2012, the surplus rose from just €0.3 billion to a surplus of €15.7 billion. For the second quarter as a whole, the balance went from a deficit of €18.6 billion to a surplus of €13.8 billion.

This reflected both an increase in the surplus of Germany and a swing in Italy's balance from a €2.7 billion monthly surplus in June 2011 to a surplus of €1 billion in June 2012,  a combination of changes that Paul Krugman has asserted isn't possible. Yet, it is happening....