Another large effect would be the very existence and the policies of a SEURO Monetary Union. The SEURO would almost certainly be devaluated with respect to the EURO and fiscal policies would be more favorable to growth in the SEURO economies. This would improve the terms of trade for existing northern trade partners while creating new markets in states party to the ACU.

But, presuming this was done in conjunction with a financial collapse in the EU, it would provide a refuge for other EU trade deficit nations wanting a safe harbor for their own currency and monetary policies favorable to their own needs.

But the biggest effect might well be on the perceptions of German leaders. They would be faced with the danger of having numerous trade deficit members of the EU joining the SEURO and of the EMU being reduced to a union containing mostly trade surplus countries and Germany would rightly be concerned about where that would lead. As Frank has noted, there is much that Germany could do to change its relations with Greece and Italy.

"It is not necessary to have hope in order to persevere."

So Germany's fiscal obsession has a sort of multiplier effect on Europe, and indirectly on the world, that is disproportionate even to Germany's economic size. And this makes me wonder whether all the sea-change in elite opinion that we've seen will do much good, since the government that most needs to change its policies isn't listening.

The problem with implementation is simply the ability to penetrate the minds of German leaders and voters. How might that come about?

"It is not necessary to have hope in order to persevere."

- Jake

Friends come and go. Enemies accumulate.