The German economic strategy of the last several decades has been to gain export market share through wage dumping. The (economic) problem with a wage dumping led export growth strategy is that it creates a shortfall of demand within your currency area (countries outside your currency area can defend themselves trivially by discounting their currencies). And since capitalists will not build factories that they expect to stand idle, a shortfall of aggregate demand harms your medium- and long-term industrial development.

The countries most likely to maintain a fixed exchange rate regime against you, and tolerate that you abuse it in this manner, are the ones most likely to be your closest economic or geopolitical allies or clients. In other words, Germany has been pursuing - consistently - a strategy designed to retard the industrial development and stunt the economic strength of the trade bloc in which they are the hegemon.

Think of it as a version of mercantilism. But dumber.

If an NEU bloc does not maintain a common currency or fixed exchange rate regime, then Germany's economic strategy will implode, and the raison d'etre for an NEU bloc will be gone. If an NEU bloc attempts to maintain a common currency or fixed FX regime, then that bloc will inherit all the dysfunctions of the €, and fall apart in turn in short order.

- Jake

Friends come and go. Enemies accumulate.