David McWilliams: Germany profited in boom so must deal with the bust
It is now down to Germany. Does it want to save the euro or not? If it does, it will have to underwrite the Irish along with the Italians, Spaniards and a few others besides, not to mention the Greeks.
If it doesn't want to save the euro, it will have to deal with a rapidly rising new deutschemark, which will soar in value against every currency -- not just in Europe but against every currency in the world. In fact, the blueprint for Germany is Switzerland, and last week the Swiss National Bank responded to the rising Swiss franc by capping its rapid appreciation because it is hurting Swiss industry. A post-euro Germany with the new deutschemark would be like the Swiss Franc on steroids. It would be like a massive Switzerland in the heart of Europe with a hugely overvalued currency.
The reason for this is that everyone would seek the "safety" of the new deutschemark as the new currencies or new blocs of new currencies fall in value, trying to find their new level. For the European economy to work properly, the rest of Europe would have to be much cheaper than Germany.