Breaking up the Euro

As I speculated some two years ago, it seems to me that if anyone should leave the Euro it is Germany. The rationale is that weak members need the union more than the union needs them. Conversely, the union needs strong members more than strong members need it.

Even assuming Greece should leave the union, I don’t see how other weak members could stay on.  If Greece goes, borrowing costs will sky rocket for all other weak members thereby hastening their demise. This in turn brings about two dilemmas. First, if all weak members start falling off the wagon then how many members other than Germany might be left? Second, even assuming Greece should go, this will bring about the marking to market of Greece’s debt held by the ECB… which I think should bring about the marking to market of all other sovereign debt held there… in other words this would be the “poof!” moment for the ECB thus the dissolution of the EU…

In my view, the path of least complication is if Germany quits the Euro and the EU



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4 Responses to “Breaking up the Euro”

  1. Patrick Donnelly Says:

    Non engagement is not an encouraging response!

    You fail to acknowledge that should Germany leave, the same problems recur, albeit with a slightly less strong divergence between economies in the euro rump. It would take longer, but the same issues would arise. Having a strong Germany would perhaps make matters worse.

    I see no solution, except closer integration and generations of convergence. The Euro mechanism requires much revision.

    • guidoamm Says:

      Yes, I can see how my position could be construed as isolationist. In my opinion, given the point we are at, the situation can more quickly and efficiently be healed with a bout of isolationism. We can see about engagement in the future once our respective houses are in order. Right now, for as long as a bunch of states are out of money and only Germany can be expected to pony-up, in the interest of Germany and the German people, I would bail out of the union. In so doing, the union would be more balanced in what each member can contribute and what it can expect from other members.

  2. Patrick Donnelly Says:

    But where would that leave the NWO?

    What you argue for can be done by revaluing the exchange rates of each country, as once Germany leaves, there will be a new strong country!

    Their political commitment is being tested. Corruption etc can be exposed if they do not stick to whatever the plan has been!

    • guidoamm Says:

      Naturally my ruminations don’t take account of the possibility that there might actually be a plan for a NWO. My observations are purely arithmetical and empirical.

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