The writer believes he owes an apology to Edward Hugh for our previous entry. Not only has it come to our attention that yesterday (due to a computer error, apparently) Spanish export statistics were briefly not available to the public and he was forced by circumstances to resort to the proxy of industrial production in order to make his point. As a matter of fact, the same thing happened to us this morning - except in mirror image. And we thought, probably due to the gnawing of a guilty conscience, that we would make amends by likewise substituting the goods exports time series from the Bank of Spain for the industrial production index for Germany from Eurostat, which we just could not find when we needed it.Fortunately for us, the reappearance of this latter material occurred before we had a chance to publicly humiliate ourselves- but we'll come clean despite the serious berating we are certain to be forced to endure. On the left is a chart of Spanish exports of goods superimposed on German industrial output - normalized from January 2007.
One can, of course, interpret such a close correlation in a variety of ways. But unless the reader is willing to wager that:
a). The fit is a result of random happenstance and has no significance whatsoever;
or
b). That Spain's entire export production consists of the making of floor mats for BMW;
then he or she might have to weigh the possibility that Spain's economic problems may not be entirely the result of international uncompetitiveness, but merely are a result of the country not actually getting around to exporting enough of what it produces to make up for the horrible state of internal demand.
We'll try to not be so quick to judge in the future.
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