Germany to leave Euro

ILW

HAMISH_MCTAVISH wrote: »

See sig.....

A lot of democracy runs on sentiment, not economic logic. Middle and working class Germans are very very fed up with what they see as having to support !!!!less and lazy nations such as Greece living the high life on their taxes.

Greece do not help themselves by still not collecting taxes due.

HAMISH_MCTAVISH

ILW wrote: »

A lot of democracy runs on sentiment, not economic logic.

Which is why all politicians lie, and voters sometimes need to be saved from themselves.

Middle and working class Germans are very very fed up with what they see as having to support !!!!less and lazy nations such as Greece living the high life on their taxes.

Let them vote themselves out of the Euro then.

And when the economic carnage hits Germany as a result, when unemployment doubles in a year, when GDP drops 10% in the first 12 months and the country is in turmoil, let the politicians explain then what they're clearly failing to explain now.

That the German "economic miracle" was an illusion, dependent on a manipulated currency allowing for capital flows from the periphery to the centre.

And that German "prosperity" was nothing of the sort. Just a decade long credit binge in the Eurozone, fuelled largely by German banks, and from which Germany was the key beneficiary thanks to that manipulated currency.

Oh.... and good luck collecting that trillion Euro debt.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

....Let them vote themselves out of the Euro then.

And when the economic carnage hits Germany as a result, when unemployment doubles in a year, when GDP drops 10% in the first 12 months and the country is in turmoil, let the politicians explain then what they're clearly failing to explain now......

... which is where we started.

You're an intelligent guy, Hamish, but I'm failing to see your argument.

The idea, here, from Soros, is that rather than p1ss about trying to ease Greece etc. out of the Euro, that Germany alone comes out. This would by definition mean a "New Dm", while the remaining Eurozone would then be boiled in its own oil.

All your argument seems to surround a totally different scenario [roughly what we have now] is that Germany obtains some benefit from a weak € - since the huge cost of propping it up is cheaper than a € collapse while Germany is part of it.

I think the consequences of a German exit is a totally different kettle of sauerkraut.

They are currently all in the descending balloon, fooling themselves that chucking out the smallest and weakest (Greece) might save the rest of them. In effect, we are talking here about Germany hanging onto the balloon itself, and letting the remaining basket-load of countries to float as best they can in a basket without a balloon.

If I were German, this is what I would want Angie to do.

HAMISH_MCTAVISH

Loughton_Monkey wrote: »

The idea, here, from Soros, is that rather than p1ss about trying to ease Greece etc. out of the Euro, that Germany alone comes out. This would by definition mean a "New Dm", while the remaining Eurozone would then be boiled in its own oil.

What Soros is saying is that rather than have a situation where Germany continues to obstruct the economic solutions required for the rest of the Eurozone, Germany should leave.

I'm all for that.

Because the Euro would then devalue, increasing the competitiveness of their exports and tourism, and the ECB would have a free hand to implement the monetary policy measures the rest of Europe needs that Germany is blocking. Eurobonds, easing, currency devaluation, inflationary debt devaluation, etc.

Germany leaving the Euro is great news for the remaining Eurozone countries.

All your argument seems to surround a totally different scenario [roughly what we have now] is that Germany obtains some benefit from a weak € - since the huge cost of propping it up is cheaper than a € collapse while Germany is part of it.

I think the consequences of a German exit is a totally different kettle of sauerkraut.

They are currently all in the descending balloon, fooling themselves that chucking out the smallest and weakest (Greece) might save the rest of them. In effect, we are talking here about Germany hanging onto the balloon itself, and letting the remaining basket-load of countries to float as best they can in a basket without a balloon.

If I were German, this is what I would want Angie to do.

Yeah.... That's the bit where your argument falls apart.

Lets say Germany leaves the Euro, there are a few things which will happen:

1) The DM will instantly appreciate, making German goods prohibitively more expensive for the depreciating Euro countries, and significantly more expensive for the rest of the World.

2) German exports will plummet, and recession/mass unemployment will follow as certainly as night follows day.

3) The trillion or so Euros that are owed to Germany by the EZ nations, if they're paid at all, will be paid to Germany in devalued Euros. Wiping out the German banks, and a large chunk of ordinary Germans savings.

4) Germany will then be forced by circumstance to devalue and inflate anyway, while running up huge deficits to cover the social costs, and borrowing heavily to get through bank recapitalisation, defeating the very reasons for leaving in the first place.

That's enough for a decade of pain, maybe more, with no gain whatsoever.

And all because Angela is too scared to tell the German people that there was no "economic miracle", and the entire recovery from the cost of reunification was based on unsustainable capital flow imbalances and a manipulated currency.

No wonder the German Finance Ministry is terrified of the "catastrophic" consequences of leaving the Euro.