Why Greece's spillover across euro area will probably be contained this time

[specuvestor]

Economics is becoming so complex in literature and jargons that sometimes people don't even realise the solution to what the statistics are saying because the water becomes muddied with numbers and letters.

That's why people can suggest increasing or not lowering food prices so that inflation will not decline. Or pundits in Australia just not so long ago suggest to support the property market because it generates the growth and jobs. Their obsession with data warped their thought process, rather than master what the data is saying in real world terms, not statistical terms.

In this case it is essentially asking Germany to reduce her competitiveness and match the lower denominator. Can you imagine what happens to the education system if it runs by such philosophy? Make no mistake: the surplus is an issue and the architects of EU know that it will create a problem in the long run hence the reason why they have this Macroeconomic Imbalance clause. But the solution is to help the rest match up, not regress.

And there again lies the nationality problem. It is not going to be easy to ask Germany to help Greeks be more competitive. I don't think Californians would have problem helping Michigans or Shandong people helping Sichuan. The assimilation of EU is much tougher and labourious than most realise except the architects, but it is not unworkable as many thought. It takes a lot of time and effort, and Germany had shown it can be done with East Germany. But then again they are all Germans.

A good article IMO, that shows that countries like Greece are not solely to blame for their problems. Like the article says, if Germany continues to run a big surplus year after year, the Eurozone will continue to move from crisis to crisis.

http://www.telegraph.co.uk/finance/comme...reece.html

...Chronic surpluses are a way of stealing demand from elsewhere. They export unemployment to other countries. This matters in an era of "secular stagnation" and excess global savings. Societies are entitled to retaliate once this gets out of hand...