TheEuro: what's in it for Germany

[pscot]

Germans hated giving up th D-mark. They don't like the Euro. And Merkel's government got thumped at the polls last week because voters don't like the bailout and fear there's more to come.

The head of the IMF, Dominique Strauss-Kahn, has encouraged European nations to join forces more closely by aligning their economies more tightly to combat future disasters like the Greek debt crisis.The steps in the direction he has suggested include a more powerful central bank and an easing of any restrictions against cross-border financial transactions.

It is easy to see the potential benefit of the notion for Spain and Portugal, who face debt and liquidity issues of their own. A powerful central bank would function much as the Fed does and would be able to inject money into troubled capital markets. Such a bank might even be able to buy troubled sovereign debt without the agreement of Eurozone nations. It is hard to see the benefit of the proposed system for Germany, and probably France.
It is still not a foregone conclusion that Germany will remain in the Eurozone alliance. There are many risks if the value of the euro collapses, but the German balance sheet would almost certainly buoy the value of the Deutsche mark if the nation wanted to return to that as its national monetary proxy. Such a move would probably increase the bets against the balance of the nations in the Eurozone with the possible exception of France. That in turn could increase the borrowing costs of Spain, Portugal, and even Greece, which has been bailed out. Some economists believe that the bailout will last less less than a year, particularly if social unrest in the country destroys GDP recovery.

Germany’s exit from the alliance could cause serial defaults of national debt among weak nations in the region.

Germany is still faced with the problems which recently weakened Chancellor Angela Merkel’s ruling party. German opinion remains strongly against the nation putting up more bailout capital and its involvement in the Eurozone at all.

The IMF suggestion makes economic sense. A central bank could rapidly react to financial trouble within the region. An easier flow of capital among the nations is the alliance might also encourage financial stability. But these programs only work if they are done on the powerful back of Germany’s economy, and its seems that the nation is unwilling to countenance that.

http://247wallst.com/2010/05/12/very-little-for-germany-in-a-united-europe/

[dotymed]

1. Creating a Central Bank

"like the Fed" would be as disastrous as it has been for America. Especially if the Central Bank lacks transparency, as in our case. It will be used, like the Fed, to enrich the most wealthy citizens under its influence. Just like our Fed.
The corporate leaders on its board, will set policy that benefits themselves. They will oversee the "bailouts" while they are making sure that their company profits are not negatively impacted. Just like our Fed.
Obviously, "globalization" sharks are implementing their wealth plan, yep, just like they did with "our" Fed. If they take down the "socialized" nations like Germany and France we will not have as many countries (especially heavily populated ones), with which to compare our "free market" society.
The first things to disappear will be their Universal healthcare. Then their strong Unions. This will allow corporate banksters greed to come before their citizens rights. This unchecked capitalism, the greed of the few, is trying to work (by design) its way into the few nations that do have strong safety nets for its citizens. It will put corporate needs first. Just like what has happened in America.
I pray the citizens of Europe will look at the ongoing destruction of the American middle class and the swelling ranks of our impoverished, and stop this "free market" (controlled by the few) economic model from corrupting their economy and their rights as human beings.
Seriously, these countries still have strong manufacturing based economies. Their economy acts much more to the benefit of its citizens.

[bossy22]

2. strong manufacturing based economies? What are you smoking?

here is a break down of the % of GDP based on manufacturing
France- 23%
Germany- 27%
Spain- 14.1%
Portugal- 30%
Greece- 20.8%
Italy- 30.7%

and here is the U.S.- 21.7%

So what do you define as manufacturing based? The truth is that all these countries rely heavily on the service sector just like the U.S. Also, if you took the manufacturing base of the U.S. alone it would be the same size as the ENTIRE GERMAN ECONOMY (if you added all these country's manufacturing sectors together they wouldnt equal the U.S. either)

Europe is in a terrible pickle; With a low birth-rate and a population reduction forseeble in the next few decades they won't be able to support their social saftey nets (think of it like our social security problem- just 10X worse). Social services rely on more money being paid into the system (or equal to) than what is being paid out. They rely off of younger sect of the population to support the older. the problem is that europe's terrible birth rate will cause their population to age and become top heavy. Eventually they will be unable to fund these services through tax revenue and will have to go to debt to do it. Now, with a decreasing population and most likely stagnant or negative growth it is every unlikely they will find "easy money". There borrowing costs will be high which will exaccerbate the problem.

To me their are only two ultimate solutions to this problem- either reduce benefits or have more babies

[Kringle]

3. the eurozone has a central bank, that functions ...

just like the Fed