stories about the latest crisis in Europe is increasingly beginning to resemble morality, convicting mindless periphery (In particular Greece and Ireland) and praising sensible center (particularly Germany). The storyline was so tight, that allowed Germany play a crucial role in determining the response to the problem and make a bet that the delay of all possible reforms tighten belts and peripheral countries should be the basis to combat the crisis. Adjustment by the spender, and funding from the tight-fisted and economical - that is the motto of the day. In general, pattern holds: Greece, Ireland and Portugal followed unreliable and unsustainable policies, lived beyond their means. But this is not the whole truth, there is something else: euro is beneficial for Germany, especially for the German export sector, because it is weaker brands. And his weakness is due to just participation in the euro area countries such as Greece and Ireland.
question arises: if it were not for the euro, which would mark was before the crisis, and most of its height, that is, at the moment? And the answer is simple, and it boils down to the fact that in this case, the German economy would not grow at 4% a year, and would barely trailed.
should remember that Germany is very cares for its exports and is always worried about how not to lose their external markets. In one of his earliest works economist Albert Hershman studied history of political debates on the topic of German trade with the late 19 th century. He noted that the export has always been seen as a key component of economic development country. Modern conditions, in fact, contribute significantly to the maintenance of this development, but, perhaps, lie at its core.
If open recognize the benefits that has at its disposal Germany can somewhat change the story, giving Germany a greater responsibility for the output of the crisis. Participation in Germany can take two forms: assistance to economic growth and debt relief. The experience of hyperinflation has not passed for the country without a trace. Now, somewhere at the genetic level, the country tends to price stability by any means. Rest of the world it understands and accepts granted.
But the country has joined the monetary union, with the central bank, which forms the common monetary policy, aimed at maintaining low inflation. This means that when other countries need to strengthen the competitiveness (and Greece is needed), more powerful neighbors, such as Germany, should increase demand and to accept some inflation. Greece is now caught between a rock and a hard place: it pays a high political and economic price for fiscal consolidation, but investors in this case still does not believe in the light at the end of the tunnel. Yields on Greek bonds indicates that a default almost inevitable that will completely destroy the country's investment climate. Prolonged instability and uncertainty about the financial prospects linked the fact that Germany (and France) do not want to incur losses on toxic assets to the Greek of their banks.
easy way to Greece more assistance - to release the "blue notes", recently proposed by German economists. They argue that the EU countries (or euro area) should provide part of the national debt in the pool (possibly up to 60% of the total) who will represent the national debt even higher level and use advantages of joint and sole guarantee. If the euro gets an asset that will be attractive enough for countries and investors, he can become a real reserve currency, which would reduce borrowing costs for Europe in general. Reducing the cost of servicing a large part of Greek debt will greatly help the country.
Paul de Grove recently proposed to change the principle of "blue bonds" so as to provide a financial advantage Germany. In this case, contributions from the servicing of these bonds will be different: countries with low debt / GDP ratio will be paying less. This amendment eliminates the main cause of disagreement with the idea of \u200b\u200bGermany's blue bonds. Meanwhile, Germany is interested in maintaining the viability of euro, already the only reason she should accept. However, if Germany will go to more substantial concessions - will actively stimulate domestic demand and put up with inflation higher than in the euro area as a whole, it is, therefore, pay back to Greece for the growth of German competitiveness and prosperity of the export sector and economic development.
Prepared Forexpf.ru based on The Financial Times
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