Wednesday, September 12, 2012

Germany’s Currency Nostalgia Is Badly Off the Mark

by Clive Crook


September 12, 2012

Let’s hope Germany thinks hard about George Soros’s proposal that it should lead the euro system or leave it. The more carefully Germans study this choice, the more eager they will be to make the present system work.

Many German voters are understandably sick of their euro adventure. The next phase of crisis management, following the European Central Bank’s promise last week to buy the bonds of struggling economies, will demand new fiscal outlays from German taxpayers and expose them to greater risk of losses later. Their growing resentment of Greece, Ireland and Portugal -- and soon Spain and Italy, whose appetite for assistance is vastly bigger -- calls into doubt Europe’s efforts to stem the crisis and threatens the euro’s viability.

Germans might reconsider their nostalgia for the deutsche mark, though, if somebody -- their own government, for instance -- had bothered to spell out the alternatives to the bailouts. Maybe Soros’s intervention will help that to happen.

Up to now, the obvious alternative to keeping Greece and the others afloat within the euro system has been for them to leave or be ejected. This used to be unthinkable but isn’t any longer. The doomsday option has become a bargaining chip that weak and strong countries alike are trying to use.


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