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Germany should exit the Euro and revalue its currency, suggests top economist

Friday, May 25th 2012 - 20:44 UTC
Full article 12 comments
Guillermo Nielsen, a Greek exit would cripple banks and trade in Europe Guillermo Nielsen, a Greek exit would cripple banks and trade in Europe

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”.

Categories: Economy, International.
Tags: Euro, Germany.

Top Comments

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  • skåre

    As if anyone in their right mind would take advice from Guillermo Nielsen on running an economy.

    May 26th, 2012 - 04:19 am 0
  • expbrit

    He may be a bit of a muppet but he is right this time.
    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?

    May 26th, 2012 - 09:00 am 0
  • Ken Ridge

    Advice from Arg who is on it's way down the pan, who still owes defaulted debt...

    I don't think so!!

    I would rather take advice from Somaliland first.

    May 26th, 2012 - 09:34 am 0
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