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Re: Minor quibble on John's euro comments

While the strength of the German economy has been influential in holding up the value of the Euro, to what extent is the Germany economy being dragged down?
If Germany had retained the mark, what value would be placed on their economy today and where would the Euro be?
At what point will Germany want to escape the Euro itself? or maybe have a two stream Euro?

Re: Minor quibble on John's euro comments

The argument is that the German economy is being stimulated by having an undervalued currency and that the peripheral economies are being depressed by having an overvalued currency.

The argument might have some merit - certainly the current and previous British prime ministers seem to think that devaluing sterling was an economic stimulus for the UK. The trouble is this doesn't take long to feed through to inflation, and the time in which you can take advantage of suddenly-cheaper everything is very restricted. The idea that Greece et al.'s problems are to be blamed on the euro is also only partly true (and not in the way most people think it is) - nothing to do with relative (and now inflexible) exchange rates, but rather to do with the impression of creditworthiness the euro gave to those governments. That is now shot and to the extent people ever learn anything, Greece will get its bailout this time, but will not get a second one if it sins again.

Do remember we had effectively globally fixed exchange rates for the entirety of human history until 1974. It's the floating currencies that are the experiment (still ongoing), not the fixed ones. Ironically, if Bretton Woods hadn't been dismantled the Euro would probably never have been conceived.