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The German crisis is a euro crisis.
(And I seem to remember rather heavy French and British exposures as well...)
Friends come and go. Enemies accumulate.
So ECB+Germany crisis= euro crisis-> Euopoean crisis.
So I think to put all the blame in Germany elite is unfair.. just two-thirds of it. So, euro crisis is a good description. If the ECB were loaning funds at 0% to Greece, eliminate the austerity measures (except for the increase in taxes) I would say is a German crisis.
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.
The euro was designed from the start to be a "strong" currency (call it an Austrian, goldbug currency if you will) and the Germans made it clear that it would be managed that way, and they were openly skeptical that the Southern countries' economies could cope. There was a spurt of policies to meet the criteria in the 90s, and then the windfall of suddenly lower interest rates came along in these countries, giving them a 10-year easy ride.
Now, they're back to paying the interest rates they were paying before the euro came along - except that they are no longer used to such a burden, and have been spending the money on other stuff in the meantime (and such spending was largely unfair or bubbly).
And they never made the case for a political union in the meantime. After 10 years of saying "we're in" and behaving as if they were "normal" members of the zone despite being less competitive in terms-of-trade.
Sure, Germany should have worried about that unsustainability, but, again, they have an easier exit from the current crisis than the weaker countries, and they have, in today's Europe, no compelling political reason to make an effort.
The euro does not behave differently than the DM did. The only difference is that instead of one big crisis, you had smaller crisis every few years,
Even if that were true, it would still be significant. Recessions are not additive - a 20 % drop in output every twenty years does a lot more damage than a 2 % drop every other year.
But it is not, in fact, true. There was no compulsion under the old system to devalue from one fixed exchange rate to another (a move which is almost always stupid). You had the option to float your currency instead (as the British did when they got tired of subsidising BuBa irresponsibility), which relieves the need for AusterityTM after depreciation, because you are not committing to defending the new exchange rate - if "the markets" want to bet that they can crash your currency, they'll have to find some other sucker than your central bank.
Now, they're back to paying the interest rates they were paying before the euro came along
Before the Euro, they only had to pay that interest on their foreign debt (in a floating rate regime, the central bank has complete control of the domestic policy rate). Now they have to pay it on both foreign and domestic debt. Which means that interest rate movements to close the foreign deficit depresses domestic economic activity, and therewith the ability to generate the wealth required to close the foreign deficit.
So, let's review:
"The Euro does not behave differently than the DM did."
(A truly marvelous subtlety is there; the Euro itself may behave similarly to the DM, but it produces very important disadvantages--which are different, that is, "not (necessarily) there," under the DM) So: nope.
"Now, they're back to paying the interest rates they were paying before the euro came along"
Needless extra interest rates with, to boot, a punishing double-whammy effect if steps are taken to reduce one. So: nope.
Jake, whatever you're earning, it's less than you deserve.
"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
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