This is an important read from the FT, citing a report from Germany‘s Council of Economic Experts.
via Let debtor nations leave euro, say German experts – FT.com.
Whilst the FT’s article is a good read, it’s well worth reading the evidence from the German experts. You can rest assured that it is being avidly read by mainstream economists around the world.
I read the executive summary from the German experts and many of the points are sound from a Germanic view of Europe. However, there are some fundamental weaknesses. Firstly, every international mainstream economist has been arguing for years for Germany to reflate, create some controlled inflation, to give the rest of Europe some breathing room. Secondly, the obsession with fiscal balancing ignores export imbalances (see Bernancke’s argument) – it also fails to address the economic case for top quality capital spending to stimulate the economic multiplier. Thirdly, it fails to address the serious policy errors by both the IMF and the ECB – this was largely in response to political pressure from Germany.