From George Saravelos at Deutsche Bank:
Euroglut is a global imbalances problem. It refers to the lack of European domestic demand caused by the Eurozone crisis. The clearest evidence of Euroglut is Europe’s high unemployment rate combined with a record current account surplus. Both are a reflection of the same problem: an excess of savings over investment opportunities. Euroglut is special for one and only reason: it is very, very big. At around 400bn USD each year, Europe’s current account surplus is bigger than China’s in the 2000s. If sustained, it would be the largest surplus ever generated in the history of global financial markets. This matters.
If so, according to him, as the world’s biggest savers, Europeans will drive the international capital flow trends for the rest of this decade.
“Secular stagnation” and “normalization” rely on views around trend growth but ignore global imbalances. It is these that remain the most important feature of the global financial system. Europe is the new China, and via large demand for foreign assets, it will play a dominant role in driving global asset price trends for the remainder of this decade.
What I would like to figure out is, what would the Europeans buy?