Sunday 19 June 2011
Why Germany must exit the euro
Germany - not Greece - has 'destabilised the euro area and is one of the biggest road-blocks to its ultimate recovery.
Telegraph.co.uk
Without Germany, the euro would be a weaker currency but it would no longer be torn apart by the
unhealthy dynamics that have haunted it in its first decade.
Imagine you’re in charge of Europe. Not, I grant you, the opportunity of a lifetime, but let’s narrow down the job description to one specific question. The only way you can save the single currency is to eject one country from the eurozone. So, who is it to be?
You might be tempted this weekend to say Greece, for understandable reasons. Not only is it facing almost certain default, it has been a constant thorn in the side of the euro – spending too much, saving too little, and displaying the kind of corporate and statistical honesty you could only hope to match by placing Bernie Madoff in charge of FIFA.
But Greece is not the word. Stricken though it is, lancing that particular boil won’t help. Greece’s issues have always been a manifestation of a far deeper problem with the currency, one that policymakers still seem unable to confront. The eurozone has been pulling itself apart for years; removing Greece will not change that.
However there is another eurozone member that sticks out like a sore thumb. It has run its economy just as, if not even more, recklessly than the Mediterranean brothers, has single-handedly destabilised the euro area for the best part of a decade and is one of the biggest road-blocks to its ultimate recovery. That country is Germany.
This might sound counter-intuitive. Germany, after all, has an enormous current account surplus; it honed its productivity and competitiveness over the past decade; where Greece borrowed it saved, where Spain splurged it cut, where Ireland inflated it deflated. But that is precisely the problem. Were Keynes around today he would have identified the issue instantly: in any monetary system, nursing a mammoth current account surplus can be just as destabilising as a deficit.
Full story: http://www.telegraph.co.uk/finance/financialcrisis/8584064/Why-Germany-must-exit-the-euro.html
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