7.29.2015

Germany's Push Against the Euro

I'm reblogging this excellent post by Dr. Alf just out today, 29 July, drawing attention to an important article in the Financial Times.

In addition to Dr. Alf's very sound comments, I would just like to add:
if debtor nations leave the Euro, it means it's NO LONGER A VIABLE CURRENCY! The first countries to go would be France and Italy...

Of course, the country that will really suffer from Euro destabilization is Germany. 

Will anyone tell them?

The article was illustrated with this image (I didn't dig it out, the FT  and Dr. Alf did):

German Chancellor Angela Merkel (C) smilles as 'council of economic experts' chairman Bert Ruerup (R) and Economy Minster Michael Glos (L) look on during a meeting at the Chancellery on March 12, 2007 in Berlin, Germany. Experts presented Chancellor Merkel a special detailed report during the meeting on how to help limit national debt
 German Chancellor Angela Merkel (C) smiles as 'council of economic experts' chairman Bert Ruerup (R) and Economy Minster Michael Glos (L) look on during a meeting at the Chancellery on March 12, 2007 in Berlin, Germany. Experts presented Chancellor Merkel a special detailed report during the meeting on how to help limit national debt
(highlight added: the image dates to 2007, that's how old German policy on the Euro is!!)

Let debtor nations leave euro, say German experts – FT.com

This is an important read from the FT, citing a report from Germany‘s Council of Economic Experts.
via Let debtor nations leave euro, say German experts – FT.com.
Whilst the FT’s article is a good read, it’s well worth reading the evidence from the German experts. You can rest assured that it is being avidly read by mainstream economists around the world.
I read the executive summary from the German experts and many of the points are sound from a Germanic view of Europe. However, there are some fundamental weaknesses.
Firstly, every international mainstream economist has been arguing for years for Germany to reflate, create some controlled inflation, to give the rest of Europe some breathing room. 
Secondly, the obsession with fiscal balancing ignores export imbalances (see Bernancke’s argument) – it also fails to address the economic case for top quality capital spending to stimulate the economic multiplier. 
Thirdly, it fails to address the serious policy errors by both the IMF and the ECB this was largely in response to political pressure from Germany.
Thoughts?

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