Germany, not Greece, should exit the Euro


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The latest round of wrangling between Greece and its European creditors has demonstrated yet again that countries with such disparate economies should never have entered a currency union. It would be better for all involved, though, if Germany rather than Greece were the first to exit.

After months of grueling negotiations, recriminations and reversals, it’s hard to see any winners. The deal Greece reached with its creditors — if it lasts — pursues the same economic strategy that has failed repeatedly to heal the country. Greeks will get more of the brutal belt-tightening that they voted against. The creditors will probably see even less of their money than they would with a package of reduced austerity and immediate debt relief.

That said, the lead creditor, Germany, has done Europe a service: By proposing the Greece exit the euro, it has broken a political taboo. For decades, politicians have peddled the common currency as a symbol of European unity…

Now that the idea of exit is in the air, though, it’s worth thinking beyond the current political reality and considering who should go. Were Greece to leave, possibly followed by Portugal and Italy in the subsequent years, the countries’ new currencies would fall sharply in value. This would leave them unable to pay debts in euros, triggering cascading defaults. Although the currency depreciation would eventually make them more competitive, the economic pain would be prolonged and would inevitably extend beyond their borders.

If, however, Germany left the euro area…there really would be no losers.

A German return to the deutsche mark would cause the value of the euro to fall immediately, giving countries in Europe’s periphery a much-needed boost in competitiveness. Italy and Portugal have about the same gross domestic product today as when the euro was introduced, and the Greek economy, having briefly soared, is now in danger of falling below its starting point. A weaker euro would give them a chance to jump-start growth…

The disruption from a German exit would be minor. Because a deutsche mark would buy more goods and services in Europe (and in the rest of the world) than does a euro today, the Germans would become richer in one stroke. Germany’s assets abroad would be worth less in terms of the pricier deutsche marks, but German debts would be easier to repay…

Perhaps the greatest gain would be political. Germany relishes the role of a hegemon in Europe, but it has proven unwilling to bear the cost. By playing the role of bully with a moral veneer, it is doing the region a disservice. Rather than building “an ever closer union” in Europe, the Germans are endangering its delicate fabric. To stay close, Europe’s nations may need to loosen the ties that bind them so tightly.

Say “Amen!”

#Karmadillo

A Texas man was wounded after he fired a gun at an armadillo in his yard and the bullet ricocheted back to hit him in his face…

Cass County Sheriff Larry Rowe said the man, who was not identified, went outside his home in Marietta, Texas, at around 3 a.m. local time Thursday morning. He spotted the armadillo on his property and opened fire.

“His wife was in the house. He went outside and took his .38 revolver and shot three times at the armadillo,” Rowe said.

The animal’s hard shell deflected at least one of three bullets, which then struck the man’s jaw, he said.

The man was airlifted to a nearby hospital, where his jaw was wired shut, according to Rowe.

The status of the animal is unknown…”We didn’t find the armadillo,” the sheriff said.

Har.

HT to Ricky Gervais for the headline. 🙂