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  1. Germany's behavior is nothing new. Its policy of strong DM was just the same before the euro, and it generated the same tensions - even worse, one could argue. And, as ARG notes; it's not just Germany - several other countries are on the same line. This is a reality which is not going to change, and quite frankly, these countries have no real incentive to go for a soft currency regime, given how a strong currency has served them in the past 50 years. Strong exports of price-insensitive goods is what allows to pay high wages;

  2. Europe without either of France or Germany does not make sense, so either France joins the strong euro group (which I expect the country to want to do), and we are back to the peripherals dropping out, or Europe gets fundamentally broken up.

So far, most of the people who call for Germany to exist the eurozone are, unsurprisingly, people keen to break Europe.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 04:02:35 AM EST
France's economic structure does not lend itself to be in the "strong euro" group. Sarkozy thinks he can be German, but he's in for a rude awakening.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 04:15:10 AM EST
[ Parent ]
it's 30 years of French policies, and France has been "competitive" despite retaining more than a bit of its "socialist" habits.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:07:16 AM EST
[ Parent ]
Right or wrong, long-standing Franco-German policy stupidity is going to kill us all.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:16:27 AM EST
[ Parent ]
That, which cannot continue forever, will stop.

Eventually.

Right now we're measuring collateral damage.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:20:31 AM EST
[ Parent ]
The sky's the limit.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:21:44 AM EST
[ Parent ]
AS the head of the swedish central bank said when he jacked up interest rates to 500% in an attemtp to save the currency peg. (Turned out that actually 500% was the limit).

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri May 27th, 2011 at 08:33:19 AM EST
[ Parent ]
(Turned out that actually 500% was the limit).

Because that was as high as he needed to go? Or was there some other actual limit.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 28th, 2011 at 10:20:53 PM EST
[ Parent ]
The defense of the peg was given up a couple of months later after a re-newed attack.

To for a prolonged time have such an interest rate would have hurt the real economy badly and probably not helped anyway as Soros et al was way better at playing that game.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun May 29th, 2011 at 09:02:38 AM EST
[ Parent ]
these countries have no real incentive to go for a soft currency regime, given how a strong currency has served them in the past 50 years. Strong exports of price-insensitive goods is what allows to pay high wages
If the price of this is turning "peripheral Europe" into an economic wasteland, is Europe worth it?

Estonia, Hungary, Greece, Ireland, Portugal...

Why is the IMF and not the ECB loaning Euros to European Union member states? It makes no sense other than as a political fig leaf.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 04:19:04 AM EST
[ Parent ]
Germany did not want these countries in the euro to start with. One thing we can't say is that Germany has not been consistent.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:08:20 AM EST
[ Parent ]
You can go back to your European Coal and Steel Community.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:10:11 AM EST
[ Parent ]
The 6-member EU, or even the 9-member EU (or the 1995 expansion) could easily be justified on purely economic terms. Bringing in the more disparate non-core members always meant that it was more of a political project tan an economic one. The economic consequences of that political decision are apparent today: you can't have such a union of economically-different members without a(n apparent) price to be paid.

The core will have to decide if it's better off going it alone, which should make for an interesting debate...

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:16:25 AM EST
[ Parent ]


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:18:08 AM EST
[ Parent ]
Germany did not want these countries in the euro to start with.

And they got in despite Germany's steadfast opposition?! If Germany voted to let them in it is fundamentally dishonest to wreak havoc through economic manipulation in order to drive them out. In for a penny, in for a pound! Germany should bail out German banks that got in trouble with loans to peripheral nations and let other countries do the same for their banks, agree to an orderly restructuring of un-payable debt, or allow fiscal union and support EMU fiscal policies that would allow the peripheral economies to grow.

But I suspect you are right. Germany probably didn't want the countries in the EMU, but was put into a position where she had to approve. Yet powerful elements in Germany have never accepted that outcome and have been successfully working to sabotage the existing system. That is how things work too often. Just like the wealthy in the USA never accepted Social Security, let alone Medicare, and have been working ever since their passage to wreck the programs.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 28th, 2011 at 10:36:16 PM EST
[ Parent ]
Of course they did! The monetary union (and, before it, the convergence to it and the European Exchange Rate Mechanism) has always been a way to shift the burden of keeping an undervalued DM to sustain Germany's intra-EU trade surplus on the deficit countries.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon May 30th, 2011 at 06:44:02 AM EST
[ Parent ]
would do better relying on Bernanke.
by rootless2 on Fri May 27th, 2011 at 11:47:58 AM EST
[ Parent ]
Europe without either of France or Germany does not make sense, so either France joins the strong euro group (which I expect the country to want to do), and we are back to the peripherals droppingbeing kicked out, orand Europe gets fundamentally broken up.

Ahem.

Please attribute the agency and intent where it belongs. Thanks.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 04:47:32 AM EST
[ Parent ]
I guess that debate will be decided on Spain - because it's the one country that was not an original member but which cannot easily be tossed out (Ireland speaks English, Greece should never have gotten in, and Portugal just rides along).

But I agree with you - at some point, Germany will have to decide whether Spain is part o the EU or not, with all the consequences that entails. I'm betting that they won't dare kick Spain out and will thus, finally, have to bear the price of that "cowardice" (so to speak).

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:11:56 AM EST
[ Parent ]
I'm betting that they won't dare kick Spain out and will thus, finally, have to bear the price of that "cowardice" (so to speak).

I'll bet against you.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:13:51 AM EST
[ Parent ]
Do we put a backstop date for that bet?

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:18:51 AM EST
[ Parent ]
As for timing, I suspect the final crisis of the Euro will be within a couple of weeks of the publication of banking stress test results in June of 2011. If the results of the stress test are bad for the German banks, expect the speculative attack on Spain to be before the publication of the stress test results; if the results are favourable for German banks, the attack will come after. But it will come.


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:20:49 AM EST
[ Parent ]
Bwah hah fucking hah

Irish Times: Stress test results may be delayed (25 may 2011)

The publication of pan-European bank stress tests, due in June, could face delay as national regulators debate how to implement and interpret the rules, three people familiar with the matter said.

...

The EBA will, within the next couple of days, set a date for publication of the stress test results, one source said.

...

The [methodological] questions emerged after national regulators submitted stress test results to the EBA. Methodology outlined by the EBA was not thorough enough and left too much room for interpretation, another source familiar with the tests said.

Given that my prediction was
if the results are favourable for German banks, the attack will come after
and that
German banks were on track to pass the test after two landesbanks recently changed their capital structrure, these sources also said today.
I guess my prediction is looking like "before end of July"...

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:32:28 AM EST
[ Parent ]
But of course HeLaBa and NordLb are the healthy Landesbanken. The only reason they have trouble during the stress test is that the ECB in it's usual idiocy and anti public sector banks prejudice decided to treat silent capital suddenly no more as core capital. That is, silent capital in public banks; they treated Commerzbank differently.

But whatever; Lower Saxony now changed the silent capital to shares and so that sub-story is over.

by IM on Fri May 27th, 2011 at 09:46:29 AM EST
[ Parent ]
So, how are the unhealthy Landesbanken doing?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 11:05:28 AM EST
[ Parent ]
Or at least they look better, because they did get substantial capital injections from their states and WestLB profited from a Bad bank.

NordLb and HeLaBa did get nothing because until the new EBC rule on silent capital they didn't need anything.

by IM on Fri May 27th, 2011 at 11:14:24 AM EST
[ Parent ]
Is pushing Greece out of euro breaking Europe?

I guess it depends on the names we are using.. if by Europe we mean Benelux, yes your definition is right. But it not breaking "Europe" at all what they propose.. they want/propose to go back to Benelux if Europe is not back to the front (which is fine by me)... if by Europe we think about the Europe of Greece and Rome.. then, the German elites are the evil ones since it is their crazy economic policy the one who is destroying Europe.

So either Europe or the Benelux, one has to pick sides.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Fri May 27th, 2011 at 04:59:51 AM EST
[ Parent ]
By Benelux you don't mean Netherlands, Belgium and Luxemburg but rather the frankish empire - France, Germany, Austria, Benelux and (Northern) Italy. Right?

The six founding members or core europe.

by IM on Fri May 27th, 2011 at 07:36:32 AM EST
[ Parent ]
Austria? Founding member of what? Certainly not the EU.
by gk (gk (gk quattro due due sette @gmail.com)) on Fri May 27th, 2011 at 07:38:55 AM EST
[ Parent ]
I said six and that obviously mean sthensix of Rome.
Founding member of the carolingian empire, is true in case of Austria.

And I do know that Portugal, Spain , Greece and Ireland are all older EU-members then Austria.

by IM on Fri May 27th, 2011 at 07:58:18 AM EST
[ Parent ]
"all once part of the former Frankish empire"?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 27th, 2011 at 07:58:59 AM EST
[ Parent ]
Approximation for the Holy Roman Empire plus the Frankish kingdom of France?
by afew (afew(a in a circle)eurotrib_dot_com) on Fri May 27th, 2011 at 08:21:11 AM EST
[ Parent ]
I suppose the Visigoths didn't count as Germanic...

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 08:22:38 AM EST
[ Parent ]
As Franks.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri May 27th, 2011 at 08:25:26 AM EST
[ Parent ]
Really, Merowingians - Carolingians - Clodowech (Clovis) - Carolus magnus (Charlemagne) the frankish kingdom and then empire that is all quite important for the history of early medieval europe. And there the history of France, Germany, Benelux etc. in the middle age starts.

Perhaps I am too parochial, but I thought the comparison of the Europe of six to the empire of the Carolingians is pretty standard.

by IM on Fri May 27th, 2011 at 09:07:33 AM EST
[ Parent ]
They why not Switzerland and the Czech Republic?
by gk (gk (gk quattro due due sette @gmail.com)) on Fri May 27th, 2011 at 08:28:53 AM EST
[ Parent ]
is the ultimate Austerian wet dream. The Swiss franc is arguably the only currency stronger than the euro, and that pisses off the Germans to no end.

Of course, it helps that they are a small country with inflows of (not always clean) money from all over the world. But it grates.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:41:14 AM EST
[ Parent ]
But the gnomes refine gold and how much cleaner can your money be than 99.999% pure gold? The ultimate in money laundering.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 27th, 2011 at 12:32:57 PM EST
[ Parent ]
The Holy Roman Empire sprang from the eastern parts of the Frankish empire of Charlemagne. Here is a map.

Main difference between that area and that of the original six members is that southern italy is in and the alpine countries are not.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri May 27th, 2011 at 08:30:31 AM EST
[ Parent ]
There are multiple maps of the HRE since it lasted nearly 1,000 years. See Wikipedia.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri May 27th, 2011 at 08:38:20 AM EST
[ Parent ]
Of course, but the map is of the empire of Charlemagne that preceeded that HRE sprang from and which I think IM meant.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri May 27th, 2011 at 08:44:30 AM EST
[ Parent ]
Yes. A reconstitution of the HRE would stretch further to the east - Czech Republic, Slovenia eastern Germany - but leave out most of France. So the Europe of six is closest to the empire of Charlemagne.

I thought that is a standard comparison. Sounds more romantic then core.

by IM on Fri May 27th, 2011 at 09:13:27 AM EST
[ Parent ]

Austrasia has always been at war with Neustria :)

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:39:36 AM EST
[ Parent ]
by Jerome a Paris (etg@eurotrib.com) on Fri May 27th, 2011 at 08:44:39 AM EST
[ Parent ]
That is what I meant. Don't you young people learn history nowadays? Who is Charlemagne, chopped liver?

Now of course this empire did include Slovenia and Switzerland, but not eastern Germany and southern Italy.

But details aside, Charlemagne reign and the original EU cover the same territory.

by IM on Fri May 27th, 2011 at 08:59:55 AM EST
[ Parent ]
So you're actually not joking with your Carolingians'R'Us?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 10:45:27 AM EST
[ Parent ]
No, It was a clever plan to kick Spain except the Spanish marches outside the EU.

It just used frankish empire as a illustration of the core or Europe of six. And that was meant in the comment, rather then BeNeLux.

by IM on Fri May 27th, 2011 at 11:17:18 AM EST
[ Parent ]
It's a standard comparison among economic historians.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 29th, 2011 at 08:19:38 AM EST
[ Parent ]
Oh geee .. what a wonderful history thread I have created. I meant a BENELUX+Germany type of union.. which are the core countries.. France and Italy were not in my mind.. but I guess you can include parts of France and parts of Italy... but given that they are only parts..

Oh.. and you shoold also take Berlin away from Germany.. other than that... ei wait.. Berlin can live inside because there would be a transfer union and common debt.. what was I thinking!!!???

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Fri May 27th, 2011 at 09:06:34 AM EST
[ Parent ]
I will ask my question in the driest form possible, without any rhetorical flourish.
by IM on Fri May 27th, 2011 at 11:19:09 AM EST
[ Parent ]
You've been PN2ed, an old ET tradition.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 27th, 2011 at 12:40:17 PM EST
[ Parent ]
Or you could add "What americans does not seem to understand is that europeans..." before it, if you really want to see fireworks.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri May 27th, 2011 at 04:33:58 PM EST
[ Parent ]
kcurie:
I guess you can include parts of France and parts of Italy.

Italy's Lega Nord will love that...

'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 Fri May 27th, 2011 at 12:09:45 PM EST
[ Parent ]
it's a devil's advocate position which serves to illustrate how Germany (and the other exporters) benefit from the Euro. It's vital to frame the debate in terms of these countries getting a free ride on the rest of us; it's the only possible way to break out of the TINA meme.

It's not easy to alert public opinion to this, because it's a sophisticated argument; but we can't leave it to the Serious People and the populists.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Fri May 27th, 2011 at 05:35:05 AM EST
[ Parent ]
The article makes reference to the following TINA argument by the Banque de France chairman: ECB's Noyer Rejects Greek Restructuring as `Horror:' Transcript
"And what are the consequences of a default? The banks with the most Greek bonds are Greek banks. The Greek banks themselves will be badly damaged. When the banking system is stricken, what do you have to do to prevent the financing of the economy from collapsing? You have to recapitalize the banks. Who will recapitalize the Greek banking system? The Greek state."
They could also restructure the Greek banks and burn their bondholders.
"If we make European states pay, the mechanism of European financing will stop immediately. The states will not continue putting their taxpayers' money on the line when their loans have just been cleaned out, when they're taking losses on the money they're lending. So that's the end of support from other European states."
We don't want no stinkin' fiscal union.
"And for the central banks, what happens? Greek debt will become debt that is no longer worth anything. It's no longer debt that can be considered as sufficiently safe for operations in the Euro System. That means by definition that to restructure is to become ineligible as collateral. If it's ineligible, then it means a large part of what the Greek banks bring as collateral for refinancing can no longer be used. That means the Greek banking system can no longer be financed."
Not true. After a restructuring, the Greek State becomes more able, not less, to service the restructure debt. If the debt is worth less but it is more likely to be repaid, the ECB could still accept it as collateral (on likelihood of repayment) but at a discount on the new reduced value. This doesn't mean it's worth zero. The ECB could well be already applying a substantial haircut to the debt as collateral. In fact, they should. In which case, after a restructuring, with a lower headline value but a smaller haircut it might well be worth the same as collateral. If the market is pricing a default into greek debt, why isn't the ECB?
"There is another possibility, which is to apply the program. To reduce the stock of debt, the only solution is ambitious privatization. There is no other solution."

"When we're in a monetary union and you need to restore your competitiveness, it is necessary to have the equivalent of an internal devaluation. Cut production costs. There is no other solution."

Get on with the program! Neoliberal shock doctrine!
"The budget adjustment that is being asked for -- they're difficult measures but they're doable. The IMF has been doing these programs for years. It knows what is doable."
Under what rock did Christian Noyer spend the Asian/Russian crisis and its aftermath?
"Don't think for a minute that we're against restructuring because French and German banks have Greek bonds. The problem is for Greece itself."
No, it might be about the issuers of CDS on Greek debt, who have been collecting premia of 10% or so for the past year or so, potentially without setting aside enough capital to actually honour their side of the "insurance" contract in case of an actual default.

The other alternative that is completely missing from Noyer's analysis is the possibility of a temporary suspension of free movement of capital out of Greece (best done through a tax on outflows rather than an outright ban).

TARA for Greece entails:

  1. a tariff of capital outflows from Greece
  2. issuing a Wörgl-type local currency backed by the country's hard currency and precious metal reserves held at the ECB.
  3. restructuring of public and private debt (see above about the effect on Greek banks)

Noyer either lacks imagination or political will.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 05:52:33 AM EST
[ Parent ]
Noyer likely assumes that, in the eventuality of a default by Greece, the ECB wold seize any "hard currency and precious metel reserves held at the ECB". Could they? Would they?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 27th, 2011 at 08:07:16 AM EST
[ Parent ]
If so, a caravan with lots of military escort leaving ECB with destination Greece would be an early sign of a pending default.

I do not know what "held at the ECB" means here, how much is electronic and how much is physical, but either way Greece would be stupid not to bring it home before a default. And if they can not do that, well then it is not Greece that is the owner, it is ECB.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri May 27th, 2011 at 08:21:32 AM EST
[ Parent ]
Which raises the interesting question of just where the physical gold is stored. The LME? They could return it to Athens or transfer it to Hong Kong and use the rumors about "fractional gold" at the LME as a reason, promising to keep quiet unless pressed.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 27th, 2011 at 12:47:06 PM EST
[ Parent ]
Errrr, do not mention Greece and gold reserves at a time like this. You'll never know how things are going to play out. As Greeks are asked to part with physical assets I have to believe that they are moments away from broaching this:

http://www.youtube.com/watch?v=4vszMkGmKC4

You gotta love how he characterizes Greeks taking loans from Germany as stealing.

by Upstate NY on Fri May 27th, 2011 at 02:31:57 PM EST
[ Parent ]
How many tons of gold did the Nazis loot from the BOG? I am certain that Germany would like to forget about it or pay Greece back at the equivalent of $35/oz.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 27th, 2011 at 04:41:43 PM EST
[ Parent ]
I've heard that it was something like 29 metric tons. I have no idea how much that is.
by Upstate NY on Fri May 27th, 2011 at 08:16:00 PM EST
[ Parent ]
Apparently, this is not that much. Maybe $300 million worth at today's rates.

100 metric tons = $1 billion

by Upstate NY on Fri May 27th, 2011 at 08:19:26 PM EST
[ Parent ]
At today's price = $1535/oz it would be more like $1.45 billion, but still...

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 28th, 2011 at 12:26:33 AM EST
[ Parent ]
(32,150 Troy oz. = 1 metric ton, presuming that the 29 tons are metric tons, not Troy tons.)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 28th, 2011 at 12:29:04 AM EST
[ Parent ]
Jerome a Paris:
Germany's behavior is nothing new

No competitive deflation since the early '00s? No shift to mercantilism aka beggar-thy-neighbour?

Within a currency union, these policies have serious effects. Outside a currency union, they would have far less.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri May 27th, 2011 at 08:34:06 AM EST
[ Parent ]
Shift?

What was the Eastern Mark - DM parity if not competitive devaluation?

They have been playing this game for at least 20 years and the rest of Europe has been thanking them for it, too.

Like they say in Trainspotting: "yeah, the English are wankers, and we Scots have been colonised by wankers".

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri May 27th, 2011 at 10:44:23 AM EST
[ Parent ]
The PIGS could escape the clutches of the core. Portugal, Ireland, Greece and Spain, possibly joined by Italy and others, could negotiate amongst themselves a joint exit from existing arrangements to a new system. It would not be easy, but neither are prospects within the existing arrangements.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 27th, 2011 at 08:36:59 AM EST
[ Parent ]
Germany's behavior is nothing new. Its policy of strong DM was just the same before the euro,

But prior to the Euro, the fixed exchange rate policy was an optional stupid pissing contest for France and Spain. Post-Euro, the stupid pissing contest gained the weight of constitutional law.

Europe without either of France or Germany does not make sense, so either France joins the strong euro group (which I expect the country to want to do),

France does not, at this point in time, have the economic means to follow a high-wage export strategy against Germany, nor the political ability (fortunately) to follow a wage-suppression export strategy.

As a matter of economic and political reality, allying with Germany in this goes against French national interest.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 29th, 2011 at 08:12:20 AM EST
[ Parent ]
So far, most of the people who call for Germany to exist the eurozone are, unsurprisingly, people keen to break Europe.
So you continue to write off critiques of the Eurozone as anti-European. How about Yannis Varoufakis? Is he also "keen to break Europe"?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon May 30th, 2011 at 06:47:51 AM EST
[ Parent ]

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