Germany’s eurozone dilemma: should they stay or should they go?

Hugh

I thought that the EU has had a max 3% of GDP deficit rule; they do not seem to have bothered to enforce that, how can they expect to do any better with this new ploy.

denis cooper

There was another option - that the EU would actually obey its own treaties.

As you imply, the eurozone bailouts are illegal under the treaties, compounding the previous illegalities through which countries were allowed to join the euro despite not meeting the convergence criteria, and were then allowed to run up excessive debts in contravention of their treaty obligations.

Whatever happens now on the economic front, half a billion people in Europe are now living under arbitrary rule, not the rule of law, and ultimately the consequences of that may well prove far worse than the economic impact.

ROBINA bull

Today the euro is at 1.24 to the USD as it was one month ago and has been rising for 2 weeks. So why inform Spectator readers that "The euro continues to plummet on foreign exchanges." Or does one plummet upwards?

Matt Andersson

Germany's general sentiment to assist failing EU states may not only be misplaced, but futile. Public sector financial weakness is merely a symptom of an underlying cause: a mix of inherent social and cultural propensities that define collective behavior, including those at a political and public institutional level. In other words, a country's financial functionality reflects its cultural functionality (or is it the other way around).

Germany however, is helpless to effect adjustments of that magnitude of intractability to its less functional neighbors. And attempting to change behavior indirectly through public financial assistance is equally futile (this is a separate issue from making its core banking sector whole from exposure to failing intra-EU public treasuries).

Absent an exit from the euro and a re-establishment of the D-mark, the only other rational path for Germany may be to fundamentally restructure the terms of the single currency pact. This would likely include a more formal German centralization of currency management and especially, a more deliberate hierarchy of public sector EUR currency terms and enforcement, including more disciplined EU-member treasury borrowing and issuing rights. Otherwise, Germany’s current financial rescue largess may needlessly put its sovereign credit at risk, while undermining the competitive vitality of its private sector.

Matt Andersson
Chicago, US

A. MacAulay

It's a nice idea and many, many Germans would support it but no party is prepared to break with the post-war consensus and give them a political direction.