Trade balance wars...

...a continuing saga...

Insularity goes both ways.  With Europe contiuing along the (well treaded) path of mercantilistic policy, the rest of the world has already gotten the joke.  Pre-emptive depreciation strikes in a global financial war, indeed.  I have written about this in a slightly different context before, but its instructive to note the tone of policy makers.

(Arnaud Montebourg, French Minister of Industry)

What is your view on the level of the euro?

As Minister of Industry, I believe that the euro is out of his nails
(french phrase: "sorti de ses clous", meaning way outside the norm) in
an overstatement that has become problematic in the eyes of all our
businesses. Between 2012 and 2013, it has appreciated over 10% against
the dollar and more than 40% against the yen. All while between the
third quarter of 2012 and the third quarter of 2013, the growth
rate was 3.4% accumulated in the United States, 2.3% in Japan and -
0.2% in the euro area! We have the most depressed area in the world and
the currency appreciates most in the world. This is grotesque.
...

Do not you afraid to start a currency war?

But it already exists this war! We are the victims and we are the only
ones not to react!