Germany, Not Greece, Should Exit the Euro
bloomberg.com
bloomberg.com
Let me offer a poor analogy which I find insightful: Germany acted like a rich neighbor who irresponsibly lends a ton money to his poorer neighbors so they can throw a really costly, drunken, all-night-long party, and then demands to be repaid the next day without acknowledging that he knowingly made a really stupid loan.
The main implication of the article: Germany is trying to force austerity and deflation unto the Euro zone's 'peripheral' countries, but the adjustment would be a lot easier and faster for everyone if Germany simultaneously forced profligacy and inflation unto itself. (A higher rate of internal inflation in Germany would have roughly the same impact as a revaluation of a newly reissued Deutsche Mark were the country to leave the Euro zone.)
My personal opinion is that the correct way is austerity, but not like it is being forced unto Greece at the moment. The greek economy is in shatters as is, the current austerity measures are not helping. I think the solution is that Germany should lend Greece way more money than currently so that they can build up their economy, whilst enforcing structural and governmental reform (ex: taxes must be collected, bureaucrats fired, etc)... Finally the money should be paid back over the next 40 years, as the economy recovers.
At the same time Germany and France recovered from euro-sclerosis not only because they reformed, but because demand for its products expanded a lot from the increased trade and growth in the periphery.
Germans should be mad at their bankers who financed the whole bubble and now demand to be bailed out with their money.
Germany being mad at Spain for bank bailouts is like New York mad at Florida for the same. We are all in this together.
Why did the spending expand (or the tax go down)? I dont think there is one clear answer to this quiestion but it does not matter. Eitherway the government shuld have reacted and cut spending (or collecting more taxes).
> Germans should be mad at their bankers who financed the whole bubble and now demand to be bailed out with their money.
The EU made that difficult to default (imposible? we will se) and the EU created the insentiv to lend so much money to these countrys (bail out garantee).
Additionally the ECB broke there rules of not exepting junk as collateral. The just keeped exepting greek bonds.
The ECB made the hole thing worst (kicking the can down the road) and now it backfires.
Just blaming out the banks is simplistic, the just reacted to instentiv like anybody else.
> Germany being mad at Spain for bank bailouts is like New York mad at Florida for the same. We are all in this together.
Sorry that is not the case.
Any economist will tell you that the worst time to do that is in the midst of a horrible economic slump.
2. Like we can see in spain or greek, not cutting it right away can have very bad consequences
3. The slump has been much worse by the thread of defaulting countrys. This would not have happpend if they had cut when they started to get a bad deficit.
The main difference I can see is just that the German economy is much stronger than the Spanish economy, not any difference in fiscal discipline. Germany can afford to carry bigger deficits and bigger debts because it has a comparatively strong economy; same reason the U.S. can maintain much higher deficits than Spain without borrowing costs increasing.
What matters in terms of financial responsibility is not public debt alone, or private debt, but both.
For the last 40 years if you built property in Spain people from Germany/UK would buy it.
How did Irish banks expect to sell more new houses than they had people?
A Germany going it alone would also have a much more expensive currency. This is one reason Germany doesn't want the Euro to collapse I suspect (along with the massive disorganisation)
Changes in currency only have short time effets. The prices tend to new equillibirum. Your imports get cheaper and after a while it reaches a new equillibirum (balance) between the two. Deflation(Inflation can only grant a short term benefits and that is without calculating in the distortionary effects
Switzerland has the same problem now, Germany would have after the Euro. In the Switzerland case it has been a much strong effect then it normal would have been, since people used the CHF as saving.
Most of Germany's trading partners are within the Eurozone. If Germany left the euro, then their currency would skyrocket relative to the rest of the Eurozone, making their exports much more expensive, and it would absolutely devastate the German economy.
Germany needs the Euro as much as the Euro needs them.
The entire situation is a disaster, because the only solution really is for Germany to support the rest of the EU through the issuance of Eurobonds. This will never happen. So the entire Eurozone is locked in this death grip.
How do you know? I'm German and I follow the German economic development for several decades now.
> If Germany left the euro, then their currency would skyrocket relative to the rest of the Eurozone
You mean to the level we had before in West Germany?
Check out the economic 'failure' of West Germany some time.
> The entire situation is a disaster because the only solution really is for Germany to support the rest of the EU through the issuance of Eurobonds. This will never happen. So the entire Eurozone is locked in this death grip.
Now it seems that you don't understand European economy.
Huh? According to you, Germans currently work hard building products that will be enjoyed by others in the Eurozone.
Why would it be bad for them if that situation reversed, and suddenly they were able to purchase the fruits of other's labor? That's like saying it would be bad for me if my stock portfolio suddenly increased in value, and I were able to hire a cook rather than cooking for myself.
The answer: the exporters adapt to every exchange rate. What they really prefer is a STABLE exchange rate - high or low. What they prefer even more: no exchange rate. Trade in a large market with a single currency is even easier.
Thank you.
BMW has factories world wide. With that exchange rate they would go on a big big shopping tour and buy any market they can.
This would be the big expansion of the German industry.
Do you have other good ideas?
How's that working out for you guys?
Check out VW some time.
We still have factories in Germany and outside of Germany.
Each BMW uses a lot of materials and energy for production. That would get a lot cheaper. Plus BMW imports lots of parts from other countries.
We really had that discussion years ago. When the West German Deutsche Mark was getting stronger all the time. BMW expanded in Europe and outside of Europe. Still it kept its factories in Germany. The quality of its workforce is extremely high.
Instead, relative labor cost would change. That labor is high quality? Yes, it is. But importers wouldn't buy it "at any cost". Higher price, same value -> less demand.
As for the DM getting stronger all the time: It did so in time, while German relative productivity was rising. On the contrary, this would create an incredible shock. I wish you not to see your dream come true. You could find out it's a nightmare.
> relative labor cost would change
German has already a much higher labor cost than most comparable countries. Still we have industry here and Germany is the second largest exporter in the world.
> while German relative productivity was rising
Productivity is high and still rising.
Deflation(Inflation can only grant a short term benefits and that is without calculating in the distortionary effects.
Germany is very much a part of the neighborhood going south (so to speak) in that they were at the very least enabling all the loose lending, if not actively complicit in fostering such an environment (e.g. why weren't they vetting their loans better).
They were either fully aware or extremely incompetent, and the latter isn't plausible.
Aside: I believe that the German banks have to live with their mistakes regarding due diligence, although even that isn't so clear as it seems that the greek authorities weren't entirely honest when it came to their financials.
Why not? I can and do blame banks for lending money to people who they know are submerged in debt. That does NOT mean those people aren't to blame too. Blame can be attributed to more than one party.
http://www.pbs.org/newshour/bb/business/july-dec11/makingsen...
"The Germans made just about every bad investment you could have made in the last 10 years. They invested in Icelandic banks. They invested in Greek government bonds. They were heavy into Irish banks, big into Irish banks, and they bought U.S. subprime mortgage bonds."
I want numbers, not stories.
http://www.haver.com/comment/comment.html?c=120604b.html
[NB Germany doesn't have the largest exposure to Spanish banks - US banks do]
In Portugal its the US banks, too. In Ireland its the UK banks. In Greece its the French and US banks.
That the German banks were largely responsible now is falsified with the numbers you linked to.
However, I can't provide direct quantitative information on the quality of the loans summarised by those numbers. Lewis (who seems credible to me) gives accounts of how German banks appear basically to have been taken advantage of (hence the "stupid money" comment) as customers for particularly ill-advised investments.
That part of the story is correct, IMHO. There are a lot of stories around it.
UK politics is paid for by the financial industry - they need more currencies to trade. A stable predictable and universal currency would kill the city.
Denmark stayed out because it was forced to have a referendum and sensible people always vote against anything that politicians are all in favour of.
I know nothing about Denmark.
Don't say this kind of stuff. It's verboten. Always, always blame lack of government spending. ;)
That would make crisis even worse for everyone, and I can't see why Germany would do something like that.
Just note a pattern. There are some countries that were spending more than they have, and those countries are in big problems. Just take a look at Greece, Italy, Ireland, and, to some extent Spain. Then, there are countries that didn't spend more than they were able to service, and they are doing fine. Take a look at Germany, Austria, Netherlands, Sweden, Slovakia, Poland. Then, there are some countries in between, that are neither too good, nor bad.
It's easy to draw a conclusion what is the way out of crisis, and I hope Germany will be able to lead a way.
I ask because, with the exception of Greece, the governments of countries in the Euro zone's periphery were not profligate prior to the crisis. That's right, their governments were not profligate. Look at the data, not at the propaganda.[1]
The private sectors of those countries, however, borrowed aggressively from the likes of German banks to finance unsustainable consumption and housing bubbles. And German bankers aggressively financed those bubbles.
[1] Read this, for instance: http://www.cepr.net/index.php/blogs/beat-the-press/the-myth-...
They waited way to long.
Italy has had a massive government debt for the last 30 years, and has not changed much. And very little private debt. Spain has had a lot of private debt only lately, but a very low public debt. Greece _cooked the books_. Netherlands have one of the highest mortgage debt in the world and a resounding AAA rating.
What's the pattern here?
Oversimplification and overgeneralization is always wrong for everyone.
German (and French) banks provided loans which inflated bubbles in the periphery. The profligate countries had to borrow from someone. This is largely absent from the discussion of the bailouts. No bubbles, no painful contractions. So the "core" isn't entirely blameless.
It's a little unfair to lump Ireland and Spain into the "PIIGS" group. Both countries are being blamed as if they ran up huge public expenditure deficits during the good times, when most of the problems lie with their banks going mad with construction loans.
In Ireland for example, our debt to GDP ratio would be something like 80% (high without being utterly unsustainable) without the bank bailouts, and it's 120% (unsustainable) including the bank bailouts. It's not like the ordinary people see any of the bailout funds either, just our banks. We do get austerity though.
At least the Spainish had more sense than to lump the bank bailout debt in with their sovereign debt:
http://www.irishtimes.com/newspaper/breaking/2012/0611/break...
One doesn't hear much about how Texas and New York are transferring wealth to keep Alabama et al floating because everyone is stronger for being part of the United States (and have an American identity superior to their state identities).
[1] http://www.economist.com/node/21547253?fsrc=scn%2Ftw%2Fte%2F...
There are German taxpayers who don't want to pay more tax/see their foreign holidays cost more/pay more for their mortgage.
There are German banks who want back the money they lost in bad loans
There are German politicians who are split between keeping the banks happy and not getting hung up on lamposts by the voters.
-- just like every other country really.
This is an old way of thinking--it's popped up every time there's been a recession coupled with a fiscal crisis. The results have almost always been bad.
The Euro crisis is macroecon 101. The periphery cannot manage their money supply to match demand. So you get deflation, unemployment, sticky-price stagnation, capital flight. People who knew their economics could have called this as it happened. Many did. Many were calling it when the Euro even began.
It's true that those with unstable debt situations have suffered more, but it's not caused by having an unstable economy, it's caused by having an unstable economy while on the Euro. "Fiscal responsibility" will only make things worse. The respective stories of Euro and non-Euro countries should make this obvious--consider Iceland, who suffered a debt crisis that caused their entire financial system to fail, yet are expected to recover better than the Euro periphery.
I do not like your line of thinking. It's moralizing in an odious way. Even worse, it's wrong.
DOWNVOTERS: please express your disagreement by telling me what's wrong with this post. I believe everything I'm saying here is factually correct. I furthermore think that this line of false moralizing, alive in the minds of central European politicians, is a major part of this crisis and a major cause of the resultant suffering. I will not run from it because I rubbed HN conventional wisdom the wrong way.
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The cost of doing so would be gigantic. Nobody in Europe would want to pay that.
Actually the Euro was introduced to keep Germany under control:
http://www.spiegel.de/politik/ausland/historischer-deal-mitt...
Without the Euro the Bundesbank had controlled the most important currency, the Deutsche Mark, alone. Many countries in Europe had been depending on the Deutsche Mark anyway - without being able to influence any decisions.
The Anglo-Saxon press is obsessed with the Euro. I've been reading a lot now over the last years about the Euro - mostly written against it. Article over article predicted its death, often within days or weeks. The Euro is still there.
Instead the articles get more laughable day by day.
The ECB still has in its mandate 'price stability' which means that it just doesn't do any inflation north of 2%, no matter what, which is an age-old German fetish. Which also pretty unreasonable because the deflation and close to zero inflation exacerbated the Great Depression - and we are in a depression again.
This is the essential part that is overlooked by most commentators. The Euro is predominantly a political instrument that is going to be kept alive at almost any cost necessary. Therefore its interpretation should blend out most of economic "rationality" but consider instead underlying goals such as the equalization of the standard of living across the European states.
* a single large market which is competitive on a world-wide scale needs its currency
* less dependence on the dollar
* use it as a tool for further integration
* stabilize countries. This may look funny given what you read all day, but when the Euro was introduced many countries were either recovering from fascism (especially in souther europe) or communism. Having a large currency makes it much more difficult to speculate against these countries. The Hedge fonds are speculating against the Euro and they have a really hard time to bring it down - like they did with other countries.
But the Germans would not have agreed if it hadn't also brought direct advantages. The one big advantage is this: trading in the Eurozone is much much easier and cheaper with a single currency.
AFAIR the last fascist there (colonels' regime in greece) ended in the '70s, while the closes thing I can think of as the euro (ECU) just had dracma added to their average a decade later.
> But the Germans would not have agreed if it hadn't also brought direct advantages. The one big advantage is this: trading in the Eurozone is much much easier and cheaper with a single currency.
They agree to it in part because the became a garantee that it will be stable but I agree that the Euro has some quite good propertys.
If the Euro had been German/Netherlands/Luxemburg it would have been very stable, very strong, and so expensive that even Goldman Sachs bosses couldn't have bought a Porsche
The alternative that is seriously feared right now is the complete dissolution of the Euro.
It seems to me that especially American and British led news agencies seem to deliberately try to undermine the Euro zone with anti-Euro-propaganda. I'm sick of hearing how bad it all is, while it isn't, and it's much worse elsewhere.
I'm from Austria, and we are doing just fine, with low unemployment numbers, a growing economy and general optimism for the future. The Euro helped us a lot, and we are able to help other EU states through it.
Stop listening to entities like "Bloomberg", they seem to be wrong a lot.
I think the ECB did some not so good things and I think inflation targeting is a idiotic policy but I dont really want to blame the ECB for any of this.
To blame are the institution of the country (and whoever is at fault for the housing bubble but I dont want to get into that).
Spain would have been hit hard by the bubble anyways but it was unreactiv government that let its spending get out of hand.
People in the "PIGS" countries were able to borrow and spend based on the credit of more robust economies such as Germany. So now, the people in these countries will be suffering for years under devaluation or austerity, but the rich who were the biggest beneficiaries of the bubble are completely safe, with their fortunes migrated to strong German banks with the click of a mouse.
The Germans and northern Europeans are culpable in this -- they essentially co-signed billions of loans to countries like Greece that lack the governance ability to function with a German credit line.
The situation in Spain at the moment seems to be that every Euro sent in the bailout is removed form a Spanish account and paid into a German bank. Spaniards speak Spanish, they read Argentinian newspapers when their brilliant economists 'solved' their currency problem by seizing the accounts of everyone who wasn't a ruling General.
But that's not the point - the point is that there isn't very much you can do at this point to stop Gresham's law in Greece/Spain/etc. Short of building a wall searching people at border Greek 'money' is going to be flying out of Greece at the moment, whether it's to Euro savings accounts in German banks or US$ held by their brother/cousin/uncle in New York.
Germany is desperate not to have the euro / union explode, and is basically saying if you want any more cash then there is proper fiscal union (ie everyone follow Germany's industrial and fiscal models.) This will screw most of Southern Europe who don't manufacture anything, so cannot export anything that is not subsidised under CAP.
So the Germans will only pay up if the whole of Europe agrees to tighter fiscal controls.
And you don't agree to tighter fiscal controls, we just walk away. Didn't you see the positive reaction to those articles we planted :-)
However the Spanish government followed the fiscal rules. It was their banks (with political connivance) that massively over reached.
I think fiscal union is the only solution Europe has. But it will also need to reign in banks otherwise another Spain will occur. Presumably a combination of never trading privately (ie only over public exchanges where markets can assess the deals) and never being allowed to exceed certain crash levels (again guaranteed through the derivative markets). Oh and never letting the Greek government lie about its borrowing levels.
Just like every other government in Europe has in one way or another. (The UK government uses PFI - they ask private finance to build a hospital and they rent the hosiptal grounds for 30 years. Never mind it is always cheaper in the long run to build your own, is that private debt? Yes according to UK government. But they will never ever stop paying the rent. Or let a hospital provider go bust.)
Its only becoming clear to me how much debt is an addiction to banks.
> ruling parties refuse to have democratic elections of this question
Seems like you don't know much about the system in Germany.
You might be well advised to study a currency phenomenon called the "unholy trinity" in regards to your opinion of speculative attacks on CHF.
Pick any two out of three: free movement of capital, control of domestic economy, stable exchange rates.
If the Swiss wanted to defend the peg, they'd have to give up one of the other two options. You can't EVER get all three.
Britain tried this with Pound Sterling, but Soros saw that their attempts to defend the currency were unsustainable. The result was predictable.
It's not beyond possible that the CHF could find itself "adjusting" the peg if the ECB decided to embark on a path of massive quantitative easing. In fact, I'd wager that lots of bets are already being made on this very hypothesis.
Separating Germany seems a particularly bad idea in that context.
- Tom Lehrer
In the face of declining European integration, our best long-term hope against wars would be the declining size of populations combined with a relative dearth of resources. Some people are hopelessly optimistic that this is enough, but I personally wouldn't count on it.
So is a war between the Czech Republic and Hungary, or Finland and Sweden a reasonable worry over your 20 year timeframe?
[edit: confused Finland with Norway.]
http://en.wikipedia.org/wiki/File:Meandros_flag.svg
I wouldn't be so optimist.
"The world at the beginning of the 20th century seemed for most of its inhabitants stable and relatively benign. Globalizing, booming economies married to technological breakthroughs seemed to promise a better world for most people."
I'm sure everyone then thought that a war in Europe was impossible - even for no other reason than how closely related all of the relevant Royal Families were. And yet we all know how that turned out.
We could have saved a lot of lives and effort if we'd just gone along with their idea the first time around. Sure, the capital would be in Berlin instead of Brussels, but is that a big problem?
The Napoleon prize.... It's for the statesman who's made the biggest contribution to European unity.
Sir Humphrey: Since Napoleon, that is, if you don't count Hitler.
We can see that happening, do you think people would say that Germany is trying it economicly instead of with war. This would not be the case without the EU.
That's what countries should do - continue building machines right at home. When there is competition from other cheaper countries, build more complex or better functioning machines.
The countries in the south of europe have not done that, and so they cannot export, irrespective of what the euro value is. Devaluation hardly makes any sense for these countries that don't earn their money by exporting.
What Germany wants is that the other countries get their house in order: keep the housing market under control, get the banks under control, have people pay taxes, etc etc.
Structural reforms.
What Germany learned from Reunification is that MORE MONEY DOES NOT MAKE AN ECONOMY WORK. Work makes an economy work. Investments. Companies. Workers. Education. Ideas. Products. Services.
There was actually two lessons for them along these lines before reunification. The first was what you mention above, during the Wiemar hyperinflation. The second lesson was that high inflation isn't necessary for economic growth, as per "The German Miracle" post-WWII
Devaluation makes sense for them because they are indebted, they will devalue their debts and make imports unaffordable.
Except that they have. Machine tools is one of Italy's major industries.
http://en.wikipedia.org/wiki/Comparison_between_U.S._states_...
But, hey, who wants to get in the way of some good ole' rethoric?
That was one of the UK's arguments against the Euro - that the economy of different Eu countries was far too different to have a single currency. And yet it was perfectly reasonable that the city of London had exactly the same financial needs as an ex-mining village in the North of England.
Germany’s strong exports are being bought by all European countries which some argue is the cause of the rest of Europe’s unemployment and fiscal problems. Us in the USA like to think it is because of bloated entitlement programs, which very well could be the major cause or a contributing factor, but it is at least plausible that the absolute real cause is Germany’s strong industrial position combined with their ability to export to the rest of Europe.
If Germany left the Euro, their currency would be so strong against the rest of Europe that it would vastly damage their competitive position in Europe leading to a massive transfer in wealth out of Germany.
I seem to remember reading an article around 2007 or so (anyway, before the shit started hitting the fan) about how the German employees' real wages had been practically stagnant in the previous decade, and about how the employers' association had basically told the unions that "it's either you keep your wage demands in check or the jobs will move to Eastern Europe". It seems to have had worked, if only for the fact that the German consumers weren't as easy going with their money.
One of the main problems of that time was changing currency values. The problem was not that the Deutsche Mark was high or low valued, it was more like the change was a problem. That made it difficult for companies to export. Large exporters were insuring themselves against currency value changes.
Basically a high valued currency made it cheap to import goods, energy and materials. A low valued currency makes these imports expensive. For example Germany imports most of its primary energy sources like oil. Devalue the currency makes the oil, gas and coal imports more expensive.
That the German industry depends or profits on a low-value currency is a myth. The Deutsche Mark was never low-value - just the opposite. Still exports were similar like they are today. The German exports will adapt.
The nice thing of the Euro is that the largest market for Germany is right around it and much of it is traded in Euros. This makes trading on variable currency values obsolete. This is the big win for German companies: it makes trading much easier and much less costly.
Second, a somewhat stronger currency would be the lesser evil for Germany than the alternative, which is being robbed blind which is what's happening at the moment.
You can have that in the US because the US doesn't typically pay the price of war, and the country knows it. The greek people know they will pay the price for invading Germany. And that price is enormous.
The fact that it is now named with a number tells you how that worked out.
Europe needs to go more than a few decades before it can declare itself the kingdom of peace.
We now know that that isn't possible. We know that the cost of bombed cities, etc is prohibitily high.
Besides at the moment Germany is one of the most if not actually the most powerful country in the world (economically speaking). Germany currently controls the future of the Euro and with that a big part of the future of the EU and the world economy. Why give up that power?
The Euro is the attempt to balance this power with an European currency. The market of the Eurozone is the sum of the countries and Germany is a part of that. Germany alone is relatively small (a market of just 80+ million people - compare that to the US, China, ...).
The other incentive as I see it is that this could also be argued as a more politically palatable solution for the ruling party since they have been (rather disingenuously) selling the line that only the Germans were responsible in the run up to the crisis and pulling out of the Euro fits rather neatly into that model of the world. My understanding is that most Germans that support the ruling party see inflation as something that is bad for them and erodes their savings and they link Euro-bonds and Euro QE with that. Bringing back a strong Mark that does not devalue would present a facade of non-inflation since there would be no QE for the Germans and no German-sponsored Euro-bonds but the new Mark would bring actual inflation because the Euro would immediately devalue.
As has been pointed out elsewhere the big problem is that the Germans pulling out of the common currency would be a step backwards in the political union objectives. If you believe that there is even a remote chance of a European war between major powers then this is a bad thing (I do not).
I think it is clear that the better solution is more political union in Europe instead of trying to drag the current arrangement through the crisis as-is. We have unfortunately seen a real rise of an "I got mine jack" voting all over the western world and this crisis is really not being dealt with precisely because that philosophy is tied to the right-wing parties that have risen to power (and are now maybe starting to fall) in Europe.
Agreed, but leaving would be a big blow to their export market. Their best interest would be for the PIGS to stick around as weak as possible (to keep the euro devaluated) but still (mostly) solvent.
> The other incentive as I see it is that this could also be argued as a more politically palatable solution for the ruling party since they have been (rather disingenuously) selling the line that only the Germans were responsible in the run up to the crisis and pulling out of the Euro fits rather neatly into that model of the world.
Maybe, but I'm not seeing a strong push to leave from Germany. And let's not forget that there isn't any opt out procedure from the euro: do other countries have a say?
> I think it is clear that the better solution is more political union in Europe instead of trying to drag the current arrangement through the crisis as-is. We have unfortunately seen a real rise of an "I got mine jack" voting all over the western world and this crisis is really not being dealt with precisely because that philosophy is tied to the right-wing parties that have risen to power (and are now maybe starting to fall) in Europe.
I wholeheartedly agree with every single word of this, my fear is that we European aren't really ready to be that united and we'd all rather die leaving than get hurt to save another country in the "union" and as a result the EU will fail the only way it can: spectacularly.
It was more successful in driving business than thought, so the scope was extended over time. No need to stick to a single goal only.
European history has been littered with examples of bitter and costly wars between nations and states. We (the world) are still resolving the aftermath of the Bosnian conflict.
There are very smart people wringing their hands over the collapse of the EU and the kind of social turmoil that might develop if the economies of these nations fail. The riots we saw in Greece and Italy were just a teaser.
In 2008, when the US was looking at its own financial crisis, one of the items on the minds of the policymakers was the very real prospects of riots in US cities. There were stories of financiers packing up and leaving the country in anticipation of what might happen.
The biggest mistake you can make is to think your country is immune to ruin. History has shown us many times that it comes quickly and with little or no warning.
The fact that we still have the same problems across cultures, genders, races, and geography seems to bolster this view.
Things change, but not nearly as much as we might like, and only at the margins.
Far-right in Europe means you want to keep 'socialist' free health care and schools - you just don't want to share them with anybody with darker skin.
No, this idea has been part of the debate for months, if not years. I hate that he makes it sound like it's his idea.
Germany is partially benefiting from current situation because capital is moving from Greece, Spain, etc. to Germany. Also, cheap Euro helps German exports. If Germany switches to Mark it would hurt exporters a lot.
Of course this would require a much tighter central control on each Euro country balance, one that would make it impossible for any one country to cheat the others (as unfortunately happened with Greece). But I think that all the EU countries would accept this right now to save themselves from a potentially catastrofic crisis.
Greece is for now the only failed state in the EU, but it has such a tiny economy (3% of the EU GDP) that it would be much lest expensive to bail it out now, with a decisive move, than try to punish it for its mistakes and, in doing so, prolonging the crisis. Fixing the other imbalances in the EU would still require a lot of work, but it would be definitely be possible if the interest rates for the countries at the center of the crisis went back to normal (as it would happen with a Fed-like BCE).
These countrys should default (get ride of the debt), balance the buget (you cant live of other people forever). Iceland has done that (the stumbeld into it).
If your smart you are going to put in place a new constitution and a new democratic system too.
This would probably be true for most of these countries; however, the Netherlands would probably just adopt the new Deutschmark. The Dutch guilder used to be practically tied to the Mark for several decades before the Euro was introduced.
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That will surely safe the Euro ship... I for one, would panic and try to get to the new currency.
I don't know that.