Do the German public know what really is at stake for them?

[Eurusd Trader]

Germany has many interests in the ongoing European debt saga.

From an economic point of view I will claim that Germany is the big winner from being part of Euro. The alternative to Euro for Germany would be a currency likely 25%+ higher in value – and a real threat to their enormous export income. During the Euro years Germany has likely benefited more than a trillion Euros from being part of a currency weaker than the one they would have had on their own. Most Germans do not recognise this benefit as almost ¾ of the population thinks that the Euro is a failure.

Now Germany is requested to help out solving the debt crises that the region is in the middle of – and in a way which the German public is not happy with. Polls show that around ¾ of the population is against helping Greece.

German papers have taken on a very tabloid approach to these issues and are very much to blame for – what I would call – a selfish approach to an issue which can only be solved being non-selfish.

The question is whether the Germans really understand that being cooperative in these questions – and in fact – being more than that in terms of helping out with a hand of leadership and capital – is very much in their own interest.

Much attention has been paid the Angela Merkel’s party and coalition party’s recent bad performance in regional elections. It’s not a surprise that they are doing badly when they are not able to get the real message through. And the real message should be that Euro is a gift to the country – as it has always been. Just put figures to this argument and calculate how many more unemployed people Germany would have had if it was not for their membership in Euro. Public opinion would likely look very different if reality was presented to them. The German public is not stupid but they need the facts.

It’s a surprise to me that these simple facts cannot be debated public – with emphasis on what they are. Instead it is a debate which is turned into one set by emotions and rather distasteful arguments.

Go on like this – and the Germans risk that some countries have had enough – and actually will leave the Euro – for reasons Germans might have underestimated. If they do so – Germany will be the biggest loser of all eurozone members. The more of the weaker economies potentially to leave – the stronger the Euro will be – and in the end it will be as strong as it would be if Germany still had the old German mark. Germany’s export would shrink and unemployment would accelerate.

German politicians know this and what comes through to me is that they try to play s game where Euro is to be kept floating with all its members in place. Weaker economies shall get help only to the extent of keeping them alive. As such the weaker economies will continue to have a negative effect on the value of the Euro, which is very much in the interest of Germany.

The question is: How long will it take before others are fed up and take the matter in their own hands?

So maybe the headline should read whether the German public are aware of what is at stake for them – not for the reasons the German tabloid papers are setting out – but for the reasons of German politicians playing a dangerous game in Brussels.

 

[Splitlink]

Germany has many interests in the ongoing European debt saga.

From an economic point of view I will claim that Germany is the big winner from being part of Euro. The alternative to Euro for Germany would be a currency likely 25%+ higher in value – and a real threat to their enormous export income. During the Euro years Germany has likely benefited more than a trillion Euros from being part of a currency weaker than the one they would have had on their own. Most Germans do not recognise this benefit as almost ¾ of the population thinks that the Euro is a failure.

Now Germany is requested to help out solving the debt crises that the region is in the middle of – and in a way which the German public is not happy with. Polls show that around ¾ of the population is against helping Greece.

German papers have taken on a very tabloid approach to these issues and are very much to blame for – what I would call – a selfish approach to an issue which can only be solved being non-selfish.

The question is whether the Germans really understand that being cooperative in these questions – and in fact – being more than that in terms of helping out with a hand of leadership and capital – is very much in their own interest.

Much attention has been paid the Angela Merkel’s party and coalition party’s recent bad performance in regional elections. It’s not a surprise that they are doing badly when they are not able to get the real message through. And the real message should be that Euro is a gift to the country – as it has always been. Just put figures to this argument and calculate how many more unemployed people Germany would have had if it was not for their membership in Euro. Public opinion would likely look very different if reality was presented to them. The German public is not stupid but they need the facts.

It’s a surprise to me that these simple facts cannot be debated public – with emphasis on what they are. Instead it is a debate which is turned into one set by emotions and rather distasteful arguments.

Go on like this – and the Germans risk that some countries have had enough – and actually will leave the Euro – for reasons Germans might have underestimated. If they do so – Germany will be the biggest loser of all eurozone members. The more of the weaker economies potentially to leave – the stronger the Euro will be – and in the end it will be as strong as it would be if Germany still had the old German mark. Germany’s export would shrink and unemployment would accelerate.

German politicians know this and what comes through to me is that they try to play s game where Euro is to be kept floating with all its members in place. Weaker economies shall get help only to the extent of keeping them alive. As such the weaker economies will continue to have a negative effect on the value of the Euro, which is very much in the interest of Germany.

The question is: How long will it take before others are fed up and take the matter in their own hands?

So maybe the headline should read whether the German public are aware of what is at stake for them – not for the reasons the German tabloid papers are setting out – but for the reasons of German politicians playing a dangerous game in Brussels.

An interesting argument that I had not thought of before. Nevertheless, do you think it possible for Germany and the other wealthy Eurozone countries, if there are any, to be able to continue rescue operations on the same scale as Greece, in the future? There has to be a point where it cannot be afforded any longer.

Could not a German mark be devalued, the same as the US dollar, in order to stay reasonably competitive?

I have the impression that the Euro will get out of this but here, in Spain, life is getting tough for the ordinary citizen, with 21% unemployment. It's beginning to look as if our social services, of which we are as proud as the UK are of theirs, is likely to be severely curtailed. We, too, are likely to have a right wing government this time next month. Unemployed Germans are going to be just as badly hit when there is no money left in the till and they are going to vote right wing when their elections come along.

So I don't believe that it is any use telling Germans that they are better off out, than in.
They have enough sense to figure it out for themselves.

 

[Eurusd Trader]

The point I try to make is that the wealthier economies benefit a lot from having a weaker currency - EURO - than the currencies they would have onn their own. The alternative currencies for them would be much higher in values. I estimate Germany to have had 1 trillion euros of "benefits" from being in a weaker EURO than a strong German mark. Compare that figure to the amount they would give as a loan to struggling economies - and the calculations should be pretty simple.
Germany can't just devalue a German mark with trade surpluses and current account surpluses. the pressure on a mark would be to the upside - not the other way.

 

[Splitlink]

Yes, I appreciate that, but try telling it to the voter, especially the one out of work. Unless the government is left wing and Merkel's waning popularity shows typical working class attitudes towards leftwing governments at this time.

The reality is not the potential 1 trillion euros of benefits. German taxpayers only see their taxes bailing out banks and member nations of the Euro. China has a lot of debt from other nations, debt that is going to devalue due to the devauation of other nations' currencies. They have a problem in the reverse direction. Would not Germany have that probllem, too? From that point of view I agree with you but, better to stay in?--- I don't know. It looks, at present, as if the wealth in the Eurozone will even out so that we are all poor.

I think that capitalists have made a **** up previously. Why should it be any different in the future? This is not only a crisis of currencies. It is a serious crisis of confidence in leadership.

 

[natureboy]

Ok - I'm getting a little sick of "DEBT CRISIS" ... what are we talking about exactly? To whom is this supposed debt owed? IMF? World Bank? The ECB or other central banks? China? It is spread around, probably, however i bet most is owed to one or two sources.

Has it occurred to anyone that this debt doesn't even need to exist? Its impossible to print prosperity, or borrow it for that matter..

How long do we play along with this? There is enough energy and arable land to support all people, at least 4 times over, period.

 

[Splitlink]

As long as countries issue bonds and other countries buy them there will be debt. When the issuing countries default on their debt and get away with it, it raises concern worldwide. The credit rating of those countries decreases so that the yield increases on the bonds. It does not matter whether we owe China, or anyone else. We have been borrowing to have a better standard of living. Now, it's pay back time.

 

[Martinghoul]

There is nothing wrong with debt per se... I also agree with the OP regarding the benefits that have accrued to Germany and the Germans as a result of the Euro. Unfortunately, they thought these benefits would come for free and now they discover they have to pay for them. So call it Euro sticker shock.

 

[Splitlink]

There is nothing wrong with debt per se... I also agree with the OP regarding the benefits that have accrued to Germany and the Germans as a result of the Euro. Unfortunately, they thought these benefits would come for free and now they discover they have to pay for them. So call it Euro sticker shock.

It looks to me like the ones in debt are wriggling. This is like the crime scene. The victims are the culprits and the thieves get a slap on the wrist.

That's the way it will end, of course. I'm convinced of that!