Let the Germans go
Published 30/09/2011 | 05:00
•Here is a faster way to solve the euro problem: keep the hard-working Germans happy.
Let Germany leave the euro and go back to the deutschmark, which will get buy-in from their people and taxpayers. Yes, initially the German mark will soar and Germany will lose some exports for a few years, but not as much as the markets are assuming. Mostly the big cars will take a hit, but a lot of the rest of what Germany makes will be more resistant to export drops.
The German exporter will talk to his workers and get some pay cuts. The Bundesbank will gradually do a managed float and get the value of the mark back down, like Switzerland did recently but in a more measured and gradual way over a few years, until Germany regains competitiveness.