My question concerns the first two paragraphs of the text. Isn't the author falsly equating causation(austerity e.t.c leads to pathological lending patterns) with correlation( countries which display more austerity e.t.c will have more pathological lending patterns)?
edit: I am specifically refering to the part where he says that for the theory to be correct there must be some differences in pathological lending patterns among the countries
edit: After reading the text again my problem now is more that I don't really understand what exactly the author is saying. When he refers to the observable implications required for the theory to fit together what theory is meant?