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"...Germany should leave the Eurozone."

"(The) asset management and investment banking subsidiary (of French bank PBCE) Natixis, released a zinger of a study designed to influence policy. It's titled, "On a purely macroeconomic basis, Germany should leave the Eurozone."

Germany should get out of the way so that the remaining countries can devalue in a big way what would remain of the euro. France, Italy, Spain, Greece, etc. have always done that, one way or the other, before the euro took that nifty tool of sudden money destruction away from them. It would be the ideal solution for France.

After conceding that there may be non-economic reasons to form a monetary union, the report lays out five reasons why Germany needs to exit. But it offers an alternate solution: if Germany wants to stay, it needs to pay.

The five reasons:

  1. Asymmetries in the economic cycles.
  2. Weakening economic ties between Germany and the rest of the Eurozone.
  3. Structural asymmetries.
  4. Different needs in exchange rates.
  5. Incapacity in the rest of the Eurozone to impose "internal devaluation."


"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 25th, 2013 at 11:33:05 PM EST
[ Parent ]
World?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 26th, 2013 at 01:39:10 AM EST
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A review of the French press reveals that this Natixis study is completely off the radar.

Interesting that we should only hear of it thanks to an American commentator.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 26th, 2013 at 03:03:34 AM EST
[ Parent ]
Here it is (in French). It needs to be promoted.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Tue Nov 26th, 2013 at 04:11:39 AM EST
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It also needs to be translated into English. :-) Great graphs, if I don't mis-translate the captions.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 26th, 2013 at 10:53:52 AM EST
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it seems logical that if the euro devalued germany would benefit too from increased exports, no?

wouldn't increased profits balance out the inflation (if there is any)?

isn't there pressure on the ECB to play nicer with the PIIGS from german export industries?

otherwise growth in the EU is being blocked by the fears of a few german savers that their hoard will lose a few percent in value, right?

how did they get so much power over the rest of our fate?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Nov 26th, 2013 at 07:04:35 AM EST
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And don't forget Germany had HYPERINFLATION in 1923!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 26th, 2013 at 10:57:37 AM EST
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And then invaded Poland in 1924... Oh, wait!

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Nov 26th, 2013 at 11:00:58 AM EST
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so basically the rest of us get hyper-deflation so the few avoid inflation.

ok then...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Nov 27th, 2013 at 05:05:47 AM EST
[ Parent ]
The alternative is for Germany to engineer fiscal transfers to the periphery, directed to capital formation.

Foreign direct investment wouldn't cut it because it would still contribute to Germany's current account surplus (if I'm nt mistaken) but it would be better than nothing.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Nov 26th, 2013 at 07:14:27 AM EST
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Mig, I suspect that German FDI in peripheral countries could help now but exact a cost later. After what we have seen why should any peripheral expect that a German FDI was anything other than an asset grab in disguise - whether it was or not?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 26th, 2013 at 10:51:44 AM EST
[ Parent ]
The capital intensity of the periphery needs to rise. That's the only way for incomes to increase, too.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Nov 26th, 2013 at 10:55:59 AM EST
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Agreed. But finance has recently found it more profitable to sell the improvement but deliver a failed project and a debt - see Ireland.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 26th, 2013 at 11:19:04 AM EST
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