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**Chris** · 19-03-2013, 10:42

That's extremely simplistic.

Germany has enjoyed a massive competitive advantage since the foundation of the Euro because its exchange rate and its interest rates have been artificially weak. Wealth has flowed into Germany from the rest of Europe and some of the Southern economies have lost 20% of their competitiveness relative to Germany in that time.

It is the Euro system that has caused this and it is the pig-headed determination by the policy elites, including domestic politicians in Germany, that the Euro must be saved at all costs, that is forcing bail-outs and massive austerity on the failing economies of the Med.

The traditional solution in any one of these economies would have been to devalue the currency. Membership of the Euro means they cannot do that. So yes, it is true they should have acted more prudently with their finances, but then when a country's political tradition of generations has been for lax economic management, granting it sudden access to the low interest rates of the Eurozone was a bit like giving an alcoholic the keys to an off licence.

19-03-2013, 10:42	#1078
Chris Trollsplatter Join Date: Jun 2003 Location: North of Watford Services: Humane elimination of all common Internet pests Posts: 38,262	Re: Eurozone will collapse... That's extremely simplistic. Germany has enjoyed a massive competitive advantage since the foundation of the Euro because its exchange rate and its interest rates have been artificially weak. Wealth has flowed into Germany from the rest of Europe and some of the Southern economies have lost 20% of their competitiveness relative to Germany in that time. It is the Euro system that has caused this and it is the pig-headed determination by the policy elites, including domestic politicians in Germany, that the Euro must be saved at all costs, that is forcing bail-outs and massive austerity on the failing economies of the Med. The traditional solution in any one of these economies would have been to devalue the currency. Membership of the Euro means they cannot do that. So yes, it is true they should have acted more prudently with their finances, but then when a country's political tradition of generations has been for lax economic management, granting it sudden access to the low interest rates of the Eurozone was a bit like giving an alcoholic the keys to an off licence.