What's Germany Thinking?

Written by David Frum on Wednesday November 16, 2011

A friend involved in the Euro crisis writes this about the most recent German actions to rescue the Euro:

This is a selfless act on Germany's part actually. A reversion to the drachma would lead to a massive devaluation & hurt the competitiveness of German exports (and it's tourism sector - everything tradable). As more countries leave the eurozone, the German competitive situation deteriorates further, especially as the Euro itself would likely rise.

But this may be political genius. Making it look like Germany is being tough on Greece while really being tough on itself. This is why the new Geek PM opened by talking about the importance of staying in the Eurozone.

I think this is on par with the Bank of China's governor playing to his leadership's pride by arguing the renminbi should be part of the special drawing rights. This implies a more open currency account--increased convertibility--which undermines China's mercantilist policy.

Category: News Tags: Euro Euro Crisis Germany Greece