“Germany will never leave the Eurozone”

And neither will Greece.

An interesting perspective in this article by Ian Bremner.

A standalone German currency would be far stronger than the euro. If Germany were outside the eurozone its European neighbours (its largest export market) would find it increasingly difficult to buy those exports, and Germany would face a similar problem to that faced by Switzerland. The shared euro makes German exports more affordable. Its increased earnings then finance its contribution to the EU, which is the largest.

If Greece, and other countries, were outside the eurozone, all would competitively devalue their currencies, to make up for their lack of productivity/competitiveness. And the market would move to invest in German bonds, pushing the D-mark up and other countries down still further.

Both/all parties benefit from union.

“The whole eurozone will tilt towards the German surplus model as we get more fiscal integration and more German leverage.”

‘Ever closer union’ is in the interest of all parties. Germany pays for it, but it is because of the union that it can afford to do so.

It is no surprise that a weak country can become stronger by linking with a stronger. The interesting point here is that a strong country can become stronger by linking with a weaker.

Cooperation is more beneficial, and hence more powerful, than competition.


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