Germany woes

Euro Benefited Germany More than Others in Zone:

With the exception of the last two years, the German economy can only be argued to have benefited more than others from the euro if you believe a trade surplus is something fundamentally good. But then, the Japanese economy was doing great in the 1990s.

.. it is no surprise that the reallocation of German savings to the EU periphery was followed by an increase of exports relative to imports. However, while the current account turned positive .. the import share further dropped with sluggish investment in Germany. Therefore, to regain competitiveness, authorities of the Sick Man of Europe tried to cut deficits and employees had to wait for rising real wages for almost 10 years. It is hard to explain why wage austerity and unemployment are benefits from the euro.

..during the financial crisis, German GDP fell more than that of most economies as losses were made in the US and the EU periphery. The savings were mal-invested and capital destroyed.

The events of the debt crisis finally set an end to the excessive private capital exports to the periphery. The risk of investment in these countries is not ignored anymore. Now, politicians have trouble to finance the state budgets that relied on lower interest rates. On the contrary, with the return of the risk premiums, savings are more than before invested in Germany. In a way, the crisis restored the pre-1996 situation when the periphery was seen as risky.