Merkel's Bluff
Tick Tock goes the doomsday clock.
With the entire Eurozone counting down to Armageddon, the last thing they would ever want is for one of their saviors to leave.
But apparently that’s exactly what it threatened to do last October in Brussels.
"If this is the sort of club the Euro is becoming, perhaps Germany should leave."
So said German chancellor Angela Merkel, strong-arming what I imagine to be a sweating George Papandreou in an effort to reopen the Lisbon treaty.
My first thought was how Rorschach-like it was for her to say that, in an “all the whores and politicians will look up and shout "Save us!"... And I'll whisper "Nein." Sort of way, but then I got to thinking…
Should they really?
A lot of people have been telling the Germans to leave, and as of late, even their own populace has been clamoring for a return to the Deutschemark.
But here are a few quick facts of what’s been going on since they turned to the Euro:
• Exports to neighboring countries has risen over 30%.
• Worldwide exports more than doubled 2002-2007.
• They became the world’s largest exporter. (Currently 2nd after China)
• GDP growth pre-crisis was over 20%.
What would happen if they left:
• New Deutschemark would soar to the high heavens.
• Exports would be crushed.
• Stock values would fall.
• Foreign asset values wiped out by the billions due to the fall of the Euro.
Looks like under different circumstances it’d be Merkel screaming for help.
Either way, it’s 6 minutes to midnight for the Euro already.
With Ireland contemplating default and Portugal; even Spain to come, Germany has its work cut out for them.
Tick Tock Tick Tock.
What do you guys see in the future for the Euro? Will Germany actually leave? If not, who the hell should?
Most of all, will it really matter if they did?
Have a great weekend monkeys.
Oh Europe... these kids just can't get along can they?
I'm waiting for Sarkozy to remind Merkel about that nasty little time known as the Holocaust and that they can't leave because they have just now started to pay off that debt. Merkel in turn should jump at the chance to yell at Greece to make peace with Turkey already so they can join the EU because they need the cheap labor and growth rates. Once this debate starts rolling again England will sneak out of line for the Euro club and remind the French how much better they are since they have their own royal currency and all. The French will remind them about their big package of nukes they still have and how is their nuclear program going again? Once the shit hits the fan with Spain's bonds Portugal will make a run for the land and finally be king again. Italy will change their government once again and promise that THIS time, they will get it right. But they are gonna need a little cash to get started so Merkel will have to write a few checks to stop their whining. The Irish figure this is a good time to hit up Norway for a loan to circumvent the IMF nuisance and hold the whole slavery trade during the viking era as leverage. The renowned financiers of Iceland figure this is as good a time as any to get back in the game and use Russia's goodwill to start acquiring banks being the little sneaks they are. In the meantime, Medvedev watches and laughs as his plans to cripple the EU all play out nicely...
LOL
They should have done that in the first place, but then again as Eddie would say; that would make too much sense.
shit tranche is what I meant to say
Merkel is sort of an idiot. Didn't the leaked cables say she was "risk adverse and unimaginative"?
Sounds like an investment banker.
Hey~oohhhhh
I wonder what the downsides would be if the EU did an Articles of Confederation -> Constitution shift along the lines of the USA where the central government assumes the debt of the individual states?
I'm sure all Europeans would just love to be run from Brussels, and I don't think they have a leader to pull it off, but it could be an interesting solution to consider.
but if wed be governed from brussels french people might have to raise their retirement above 35, and that would cause civil war. and alot of "Mais non!"
People have been trying to call the breakup of the EU every time there is a crisis, and each time it's never happened. When the euro tanked against the dollar the first time it was printed, everyone thought the whole project was going nowhere. When the Treaty of Lisbon was rejected, everyone said the same thing. When they couldn't come to an agreement about inducting Turkey, everyone said the same thing. When they let the Russians use their natural gas supplies as a baseball bat, everyone said the same thing.
Honestly, the costs of leaving are too great. The EU isn't going anywhere. They might bluster and argue from time to time, but they need each other if they want to stay relevant on the world stage.
Forgive my ignorance, but what happens to debts in denominated in Euros if it collapses?
I am not sure but I guess the same thing that happened when the euro started to begin with, the debt just gets exchanged into local relevant currency at some kinda fixed rate?
This is all I have to say http://www.economist.com/node/17629757
Laudantium rerum doloribus illo iusto deserunt ducimus. Est non ad nemo aliquid aut aut. In earum voluptate non minus. Quis ea sit tempora molestias eum voluptatem autem.
Et illum at qui at voluptatem earum voluptatum. Ab voluptatum alias eum quia repudiandae similique est consequatur. Ex ex quod mollitia fugit maxime voluptas nam quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...