About a decade ago, the world looked on with envy when a single currency was created in the EU. Everyone thought that this was the way forward, without really thinking about what happens if things go wrong. Depriving countries of their own currency printing presses has proved how Germany used the poor EU nations for a selfish motive. For starters, it was Germany who used their political clout to help small meaningless countries such as Greece, Hungary etc to become a part of the Euro. This was aimed specifically at ensuring that if these countries were part of EU, the Euro would trade weaker, than the standalone currency of Germany. German exports were in trouble a decade before the Euro was established as the Deutsche Mark was quite a strong currency.
With this devaluation of the Euro, Germany’s exports flourished and the economy was constantly expanding at the cost of poor nations such as Greece. But remember what goes around comes around and now Germany is singlehandedly paying the 1 trillion Euro to basically save every bankrupt nation in Europe.
The silver lining here is that over the last six months, the Euro has depreciated significantly to the US Dollar. Assuming that the end consumer is the American, this devaluation of Euro may just prove beneficial in reviving demand as products will become cheaper. Of course this is a function of how the US economy grows, as in theory fiscal prudence results in more contraction of the world.
However assuming US expands at over 3% next few quarters and somehow stays out of the EU mess; Germany may just well be able to save the continent.
What has to been seen is, if “things are different this time” as it’s the US that has to call the shots on staying out of EU.
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