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Transfers are a non-solution. Giving the periphery money will sustain living standards, but neither employment nor any sort of economic and industrial development. Germany has to buy more goods and services from the rest of europe, which means they either need to maintain current comsumption and reduce production (this is not likely to go well!) or they need to increase german consumption. Which means they need to pay the average german worker more. Wage restraint in Germany has imbalanced everything. - The issue isnt that the periphery is living beyond its means, the issue is that Germany is living 6% beneath its means.
by Thomas on Wed Aug 29th, 2012 at 03:34:53 AM EST
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