The Germans would have to be damn fools to go back to the costs and hassles of cross-currency activity. If nothing else, their food prices would rise as there is no chance in hell - AFAIK - that the Danes and Poles would prefer the DM over the Euro, implying the German consumer would end-up paying for the costs of cross-currency transactions for both the importing and exporting companies.
Politically, European stability, by that I mean "not shooting each other," stems from the Germany/French Post WW2 alliance. Germany withdrawing from the Euro would certainly cause 'tensions' in that alliance and, to an extent I cannot comment on, put that alliance in doubt.
Merkel & her band like to pretend they are oh so fiscally responsible but it's been demonstrated elsewhere on ET that's a lot of malarkey.
All of which leads me to suspect Merkel & Co. are playing some kind of Game. What Game and Who it is directed to/at are questions I defer to those who have greater insight.
You may be giving them too much credit. Maybe they don't understand what they're doing, and their macroeconomic policy is based on a number of nice-sounding but incompatible soundbites they picked up somewhere. The brainless should not be in banking -- Willem Buiter
The impression one gets is that no one in Germany is receptive to the idea that Germany benefits from the Union, the single market, the single currency, or that German policy over this decade in depressing wages and social budgets in order to gain competitive advantage and keep inflation and therefore ECB interest rates low, has had any conceivable ill effect on Eurozone partners (such as, for example, helping offer lower real interest rates to countries that might have been wiser to borrow less... and whose private and some public debt has gone into buying German consumer and capital goods).
If, behind this convincing display of obtuseness and arrogance, there is a secret Game Plan, it's devilishly well hidden. What might it be?
The key - in my estimation - conflict is NOT the Greek government bond foo-foo or even the euro per se; it's whether the Post War dollar hegemony is going to continue. The euro is poised to be a acceptable alternative to the dollar. Naturally those who depend on the dollar hegemony aren't happy which includes other financial and economic entities outside the US, inside the eurozone.
Germans are unhappy of their economic situation, but feel righteous about it (they took the stagnation on the chin rather than thriftily borrowing to keep on spending).
They would probably welcome increased wages, but have been brain-washed, for good and bad reasons, that this would be a dangerous thing to do (bring back inflation, make them less competitive, cost jobs, etc...). Wind power
Ah, who am I kidding??!
Propaganda works, if you get such results... Wind power
