Remember when things got so bad on
the Euro periphery that countries like Spain, Portugal, Italy, Ireland and,
well, Greece, had to pay exorbitant rates in order to borrow on the
international bond market? It turns out that the same Euro crisis was worth €41
billion Euros to Germany. This was because of the flight to safety of
investors, who were prepared to effectively pay that country for minding their
money for the duration of the crisis, according to an answer given in the
German parliament and reported in Der Spiegal: http://www.spiegel.de/international/europe/germany-profiting-from-euro-crisis-through-low-interest-rates-a-917296.html
This report illustrates very well the
symbiotic relationship that exists between Germany and the EuroZone peripheral
states. The economy that is overseen by Angela Merkel is a strong one. Even
without a Euro Zone, Germany would find itself in the position of being bankers
to the rest of geographical Europe. Without the EZ, however, Berlin would find
itself in the same position as Switzerland – it would have a currency exchange
rate for the Deutschmark that would make its exports prohibitive for the rest
of the world. A Euro which is diluted as a result of the relatively profligate
activities of certain other members is a positive for the Germans.
Does
austerity have rewards?
Now, if only Frau Merkel and her
finance minister could convince others that the Teutonic way doing things of a
fiscal nature – living within your means so that you can pay your bills, no
matter what, and thereby find yourself in a position to profit from the good
times – is the way to go, they would get a better press from the opponents of
so-called austerity, many of whom have taken to dressing their opposition up in
self-serving pseudo economist-type pronouncements.
But no-one can accuse the Germans of
not setting the example. They found themselves in definite austerity mode after
the reunification of east and west. They stuck with it and the economy we can all
see at present, even after a devastating global financial crisis, is the
result. Must have something going for it.
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