Germany should exit the Euro and revalue its currency, suggests top economist
Germany should exit the Euro and revalue its currency as “damage control” to avoid the effects of contagion stemming from a Greek exit, which would cripple banks and trade in Europe, according to former Argentine Finance Secretary Guillermo Nielsen.
Germany’s higher productivity warrants a higher, less competitive valuation for its currency, Nielsen said. A Greek exit would be more costly and threatens the solvency of the region’s banks, he insisted.
“The discussion so far has been framed by the predominant power in the region, Germany,” said Nielsen, named finance secretary in 2002, months after Argentina defaulted on 95 billion dollars of debt.
“Instead of searching for the truth, they continue to keep the discussions under politically correct guidelines. They need to break the standstill.”
A German exit would be easier to promote than a devaluation of the periphery and would help generate confidence, Nielsen said. Politically, it won’t be feasible for Germany to increase transfers to southern Europe.
Meanwhile, the rest of Europe needs to push through “radical change,” and Greece should issue paper bills to use as quasi-currency immediately, according to Nielsen.
“A cross between an I-owe-you and paper money would help bridge the funding gap and avoid Greece going down the drain,” said Nielsen. “Simultaneously, Greece should stop all movements of capital. They should have done that a long time ago”.
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Trouble is, if Germany leaves the eurozone there won't be any reason for most of the other members on that side of Europe to stay in, or for new countries to join.
After all, who is going to give/loan them loads-a-money if not Germany?
I don't think so!!
I would rather take advice from Somaliland first.
He is a lot of a muppet and he is entirely wrong. The sort of moves he is suggesting would instantly kill the market for German exports and push Germany into a recession the likes of which it hasn't seen since the aftermath of WWI.
The rights and wrongs of wrong and right are just a question of perception. :)
I'm not saying it would be good for Germany.
I couldn't give a shit about Germany .. I am more concerned about the disastrous effect such a German recession would have on Norway, Denmark and the UK :)
And remember, IF the every country around Germany started printing franks, guilders, liras, pesetas, and devalued, Germany would suffer a massive instantaneous loss of competitivity, they would become prohibitively expensive and the economy would fall into a deep, deep recession. They woudn't export and they would be flooded by cheaper goods.
Either they would have to massively devalue themselves, and Europe gets into a “race to the bottom” spiral (since the central countries devaluing would mean the Pound and the Scandinavians would be forced to do so as well), or they would have to take big proteccionist measures and tariffs which would lead to a huge trade war intra-Europe.
For Germany, the current status is the least worst solution.
Probably what we all knew from the beginning: there was not any apart from the Europhobes and the non-elected masters of the EU.
youtu.be/NHjLO_cw5iE
The average German people hates it and punishing Merkel of what's going on but the “elite” loves the chaos/cheap Euro. I'm glad that finally that one of main discussions in Holland are about leaving the Euro, something I and many Dutch citizens never voted for “directly”.
I thought you were Brasilian?
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