Monday, September 6, 2010

And again

Another article, this time in City AM, on the question of how long Germany will stay in the euro. Guy Johnson of CNBC considers that "Germany will soon tire of footing the euro bill". Admittedly, Germany has gained something out of the whole mess.
To be fair there are some upsides to membership. Possibly the biggest one comes from the very weakness of the rest of the zone. Greece, Ireland and Portugal have all done German manufacturing a favour this year by driving the euro lower – in the process making German exports much more competitive.
But with the German economy, apparently, growing fast, will that be enough, particularly as other export markets become more important.
The single currency has always been a primarily political creation, rather than an economic one. But increasingly it’s economics that will determine its future, rather than politics. Put simply, it will not be too long before Germany doesn’t need its Eurozone partners and certainly won’t want to pay for their problems any longer.
Not this time round, I still maintain, but another crisis and that might happen quite soon, and Germany will probably look long and hard at her options. The war was a long time ago.

1 comment:

  1. I believe the 'Shock and Awe' bailout was around 850 bill. Spain alone is sinking > 100 bill. per month by palming off govt. debt directly to the ECB. I'll bet all the usual suspects have their sticky fingers in the billions also.
    So I reckon sometime around the holiday season next year it will be 'noticed' that the ECB is underwriting a few trillion it hasn't got. What are the odds that the EU will try to 'Nationalise' the various provinces' currency reserves?