So the crises in peripheral countries is keeping the Euro value down and allowing Germany to grow and maintain surpluses and feel all virtuous and superior about itself - and also keep it's nervous anxiety about recessions at bay.

The problem is - where do you invest your surpluses?   The USA is about to default.  China is actively looking for other outlets for its surpluses and to diversify out of the US.  There is a lot of money looking for a home shloshing around the world like a drink in a drunken hand.

Meanwhile demand is anaemic because of the enforced recessions in Peripheral countries creating a negative feedback loop diminishing all.

Sooner or later, someone is going to have to come up with the obvious solution - stop impoverishing everyone but an increasingly smaller elite who can only consume so much.

PS what is the impact of a US default on the Eurozone - is this what is driving panic in Germany?

Index of Frank's Diaries