They could also import from non-euro countries; what then?

Then the Euro falls relative to those currencies, until those imports stop. That is why you have a floating currency.

This isn't fucking rocket science.

<The low-wage service sector may be unimportant to the export side (to low order), but it is very important to the import side.>

But then you are shifting your argument

No, my argument has always been about current accounts imbalances.

That it comes as a surprise to you that current accounts imbalances can arise from both import suppression and export subsidies speaks to the quality of your knowledge of national accounting, not to the quality of my argument.

- Jake

Friends come and go. Enemies accumulate.

Under an "economic equilibrium" frame it would go something like this:

Then the Eurozone would no longer be in trade balance as a whole so there would be a downward pressure on the exchange rate. The rest of the Eurozone would benefit from the lower exchange rate, and would increase their exports outside the Eurozone, too. Equilibrium (again balanced trade EZ-wide) would be attained at a lower exchange rate. But now Germany would be running a smaller trade surplus and some of the deficit countries a smaller deficit.

Imports would become more expensive and that would lead to some pain, but also for opportunities for import substitution if because of the lower exchange rate production in the EZ became profitable where it was marginally unprofitable before.

Unfortunately, the ECB would react to the consumer price inflation resulting from the more expensive imports by raising interest rates and nipping in the bud any private-sector attempts at investment for import substitution. And the public sector, as we know, cannot do anything meaningful without running afoul of EU "illegal state aid" rules.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker