Be Bold, Bitte

The Economist writes: If the euro collapses, then Germany will suffer hugely.

The downgrading of some of its banks this week was a portent of that. Moreover, the undoubted mistakes in Greece, Ireland, Portugal, Italy, Spain and the other debtor countries have been compounded over the past three years by errors in Europe’s creditor countries. The overwhelming focus on austerity; the succession of half-baked rescue plans; the refusal to lay out a clear path for the fiscal and banking integration that is needed for the single currency to survive: these too are reasons why the euro is so close to catastrophe. And since Germany has largely determined this response, most of the blame belongs in Berlin.

Throughout this crisis, Mrs Merkel has refused to come up with a plan bold enough to stun the markets into submission, in the same way that America’s TARP programme did. In short, even if her strategy has paid some dividends, its cost has been ruinous and it has run its course.

One response

  1. Actually, the more likely scenario is that the Euro looses some value. In that case, Germany, the nation of exporters makes out like a bandit just like it did a year ago when the Euro slipped slightly.

    Part of this problem is one of near-universal pan-european economic illiteracy. The prospect of the Euro devaluing is being looked at as a reason for the general public public to believe that the Euro will disappear, the continent will explode, etc.

    The people writing that way, drawing cartoons, and so forth, are just riding that popular opinion trend and Eeyore-esque self-pitying rhumination.

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