Germany Should Leave the Euro but Probably Can't - David Champion - Our Editors - Harva... - 0 views
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a break-up of the euro may not in Germany's short-term interests.
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Being in the euro helped Germany become more productive relative to its southern neighbors. If Germany still had a deutschmark, the discipline of its businesses would have been rewarded by a relative increase in its value, thereby limiting the disparity between Germany and other countries. Germany would not, therefore, have experienced to such a degree the low unemployment and healthy growth that its voters have gotten used to. In turn, this would have tempered the flow of German funds recycled southwards as investments in Greek, Spanish, and other assets, reducing the bubble pressure on Club Med asset prices.
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Breaking up the euro, whether by Greece and Spain or by Germany, could at a stroke eliminate those productivity advantages and possibly stall the German economy. It could also instantly crystallize losses on assets held by German savers in Club Med bonds and loans, probably necessitating an immediate capitalization of the German banking system. In other words, the problems currently being experienced in the South would get transferred to the North.
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