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Germany has to leave the euro and not Greece

2015.10.05 00:28:40

Has long been talk of Greece's exit from the euro and return to the drachma. Highlighted the disastrous consequences of such a move because of the high exposure of banks and insurance funds in "toxic" most government bonds.

 True, such a move would have disastrous consequences for the Greek economy. Monetary freedom, unfortunately, can not offset the shock suffered by an economy that is heavily dependent on imports, including fuel.

But the problem may be seen from a different perspective. Why leave a weak member of the Union of the euro rather than the strong Germany? Did such a move is more advantageous than the output of potty outside Greece that the destruction of the Greek economy there is no way mean automatically and save the euro?
The Marschall Auerback us analyze this solution to the euro problem seems in economic terms at least perfectly reasonable. Let's see.
There is another way to resolve the euro crisis.
Get out Germany from the eurozone. Let's leave aside for a moment the policy as many believe that the exit of Germany from the euro would mean the end of the euro as well as many others will follow. Consider this exercise from an economic point of view: The likely result of a German exit would be a huge appreciation of the new mark. In fact, all the others will devalue their currencies against the strong mark and the weight of strong reflation will fall on the shoulders of the more unruly members of the eurozone. Germany will probably be forced to bail out banks, but this is politically more acceptable to rescue the Greek banks (at least from the perspective of the German people).
Surely this will not happen without some costs for Germany: Germany is likely to rescue its banking system but destroying its export base. The new mark will be thrown against the euro and will become the last safe haven. This will alleviate the downward pressure of the inevitable haircut (haircut) of debt in euros, as the euro (assuming that is maintained by the remaining eurozone countries) will depreciate dramatically. Even if the Euro will evaporate, the Germans will simply pay debt old currencies, which correspond to fractions of their original, pre euro value. And the German people would accept this more easily, as it did before the reunification of Germany, on the use of German taxpayers' money to recapitalize the banking systems of profligate Mediterranean countries.
Following the same principle, a drop of German external surplus means a large increase in the budget deficit (unless the private sector begins to expand rapidly, which is unlikely under this scenario), so Germany will be faced with very larger deficits. At this stage, although Germany has a high surplus is insufficient to compensate for a high savings available to the private sector (which means that there is a deficit). But the current surplus would allow a deficit smaller than that of the prodigal Mediterranean countries and facilitate the tendency to save the private sector. As we have already said, it is precisely these "pierced hands" trading partners of the Mediterranean that enabled Germany to have huge surpluses and hence lower deficits compared to the so-called PIIGS countries.
Once the divorce with the euro, Germany would recover its tax freedom. This is something that Germany will celebrate, since the government will have advantages from this freedom. Keep in mind that the return to Mark, Germany has become publisher of the coin and not normal user as in the case of the euro and is completely dominant fiscal and monetary. Therefore, the German government can offset the external shock with high government budget deficits which will add new financial resources in the system will be available to the private sector executives. Germany may well not adopt this course of action given the historical resistance to aggressive fiscal policy, but will no longer captive indigenous European Economic Union institutional constraints.
Meanwhile, the rest of the eurozone will suffer a strong boost competitiveness due to the depreciation of the euro against the new mark. Also, the resulting dynamic instability means that the ECB will have to fully support all the bonds to prevent a full-scale crisis, but now encountering less political resistance because of the loss of the German resistance.
This problem of the workaround may seem curious, but the paradox of this statement assumes that an exit from the euro area a strong State, and not a patient, could be the best solution to the problem of saving the euro.
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