US Decoupled from EU. -Not-

Also Paul Kedrosky, 5/6:  
Even in the best case, a Euro decline – cascading or otherwise – is likely to lead to severe austerity programs and prolonged European recessions. That will not be good for anyone selling into Europe, which is to say, all advanced economies.

But what does it mean specifically for the U.S.? One starting point is to look at the U.S.’s largest export markets, which I have summarized below. The five largest European markets for the U.S.’s good are, in order, the U.K., Germany, Netherlands, France and Belgium, which collectively account for 15% of U.S. exports. While that is not immense, and none of those countries are current in the bond vigilantes’ cross-hairs (is that mixed military metaphors?), it isn’t tiny either.  Further, it ignores knock-on effects, as German imports, say, decline driven by declining exports to trouble European countries. Similarly, we shouldn’t forget that banks are far from clean here, with many over-exposed to PIIGS debt, whether directly or through having sold credit-default swaps on these sovereigns.