Germany might seem to be the good European in this whole affair, having given up its stable Deutsche Mark for the sake of continental unity and then paying a disproportionate share of the costs whenever things go wrong. But it too was primarily motivated by it's own economic reasons. Germany and a few other Northern European countries, such as the Netherlands, are hugely successful exporters. For them, keeping unemployment rates low requires steady export sales – and that’s very difficult if their currencies appreciate. Tieing itself to weaker economies through the Euro, which prevented the currency from appreciating too much. In effect, Germany was subsidizing Italian, Spanish and Greek consumers so that they could buy expensive German products, thereby preventing layoffs at German manufacturing firms. This made great sense as long as the cost of propping up weaker economies wasn’t too big. But now, Germany is facing the prospect of huge, open-ended payouts that will greatly exceed the economic benefits. They knew the risks they were getting into, now it's blowing up in their face.



I'm surprised that the idea of Germany and a few other strong countries seceding from the Eurozone isn't being more discussed. I understand that this outcome isn’t particularly likely, but it would almost certainly be the best solution for everyone. Germany, the Netherlands and a couple of other financially strong exporters could unilaterally leave the Eurozone and set up their own new currency. The existing Euro would immediately depreciate against this currency, as well as against the dollar, the British pound and the yen. A cheaper Euro would make the countries remaining in the Eurozone more competitive and reduce the real value of their national debts, offering almost instant economic relief.