Should Germany bail out Club Med or leave the euro altogether

Germany before the terrible dilemma. Or the cashier agrees to save Europe and Greece refuses to strong opposition to the irreconcilable European countries, treasury, debt union, or the euro will fall apart, and with it the investments and strategic post-war Germany.

Leap spread to 400 basis points between the yield 10-year Greek bonds over German was amazingly fast, which may serve as a warning to Britain that the market could suddenly put pressure on any country without a doubt, accepts the terms of the creditors.

We can argue about whether Greece, Portugal and Spain are at risk of being displaced from the euro area, but there's another pressing question: if these developments will push Germany and its sattelity to abandon and transfer guardianship of the European Economic Union (EU) bloc in central Europe?

This is the only script output, which makes sense. Germany's withdrawal will allow the countries of central Europe to maintain contracts in euros and devalue the lowest loss for the domestic debt markets. Germany could enjoy the profits, falling from the sky. Deutschmark-2 could be stronger. The cost of credit would fall. The gap in competitiveness between the north and south could be overcome with less damage to both sides.

Clearly, the position of Germany in the EU is very convenient. Compressing wage in a decade, they have excluded the possibility of growth of the EEC. Critics call this unfair policy of "beggar my neighbor". It's just the way that operates with the Lutheran community, and it contrasts with how come Catholics, causing a "cultural clash" that should take a pause for reflection before the European elites to think of their actions before they begin to act swiftly.

German goods have flooded the south. During the 12 months up to November, German Benelux accumulated current-account surplus, equal to $ 211 billion: Spanish shortfall of $ 82 billion, Italian - $ 74 billion, French - $ 57 billion, Greek - $ 37 billion. German industry can not easily go through this acute angle. Nevertheless, in the end, this issue will be resolved by democratic means. In 1990 the German citizens of their leaders had pledged that the rejection of the mark will not lead to monetary disorder, or do not hold them responsible for the debts of the States of Central Europe. It is a sacred promise to the EEC.

"Politically suicidal will tell voters that they can save another country so that they could avoid painful cost-saving measures that have previously passed themselves" saviors. " Such assistance, sound, or, worse yet, no, in any case be counterproductive. "

Dr. Weber rights on both counts. New loans will not bring anything good of Greece at this juncture. Greece already has a national debt, striving for 138% of GDP by 2012 (according to Standard & Poor's), which indicates untwisting the debt spiral. EU elites have yet to admit that Greece and most of the countries of central Europe in need of gifts, not loans, which are similar to the transfer issued by East Germany after unification or eternal grant of northern Italy to the south.

Athens promised to cut the budget deficit by 10% of GDP in the next 3 years, and that the country is slipping lower and lower, faced with a 20% unemployment rate by year's end, has a fragile banking system, and has already lost control of the streets even before the announcement of the beginning reduce costs. Such a policy is economically harmful as it creates the risk of collapse of the tax system and tipping the country into a depression, but I will put up with it the Greek society?

The Government of Papandreou's cunning, inviting the European Commission to create a vice-royal inspection in Athens, to focus on her people's anger. Media talk about "custody". Ta Nea, Athens newspaper, wrote about the "ultimatum" and "suffocating deadlines, aimed at cutting salaries and pensions. "Either we obey orders to implement austerity measures and risk having to face social unrest, or we refuse to follow orders."

Problems of Spain are not as urgent, but the country lost so many competitive advantages during the early boom of the EEC, that this led to the debt trap of negative real interest rates. External corporate debt dangerously high. The budget deficit amounted to 11.3% of GDP last year. Madrid has suspended a reduction of 50 billion euros to sweeten the markets, although the unemployment rate is already at around 19%. The unemployed typically receive 50-60% of the earnings from the last job for 18 months, then payments stopped completely. The social catastrophe occurs with a delay. How many more cuts will be able to Spain before the Catalan, Basque and Galician separatism "lift for the buck" the Spanish state?

As a way to survive, without monetary austerity and monetary incentives justified. This policy must fail, because it is based on the fact that countries with high debt loads will be able to restore the high level of competitiveness within the EEC against zero inflation in Germany. Such a strategy will lead them to the debt deflation spiral.

Europe will have to take the "fiscal federalism", if she wants to preserve the integrity of the monetary union. Right here and show solidarity outside the EEC. Hedge funds pose to the fact that Berlin would pay to maintain stability. There is no doubt that Chancellor Angela Merkel (Angela Merkel) holds similar views, but the Free Democrats - not, as Christians and social Bavaria, or the finance committee of the Bundestag. Minister of Economy Rainer Bruderle (Rainer Bruderle) said last week that financial aid will not, regardless of the risks to the EEC. It's just a policy of confrontation?

Built by the EEC had been warned in the early 90's that monetary union could become unusable as soon as created. They laughed, convinced that any crisis can be used to accelerate the pace of economic integration. Head of the Commission, Romano Prodi (Romano Prodi) later confirmed the deal. Euro will force us to introduce a new set of economic policy instruments. Now it is politically impossible, but when a crisis occurs, and new tools will be created. "

Soon we learn, will justify whether the game itself, or will be losing disastrously.

The Telegraph
January 31