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Economy 4.0

From the Road: Euro Angst

David Brancaccio Jan 12, 2011

Is Europe on the verge of throwing out it its single currency?

You hear whispers of that, in the face of strains on the continent’s monetary union caused by the financial crisis in Greece, in Ireland, possibly Portugal and beyond. Many folks here in Germany, in particular, are feeling fed up. They see themselves as living within their means prudently, not ostentatiously, and they are hacked off at the notion of public money, a lot of it their public money, going to bail out countries that have busted their own budgets. Two people in separate places mentioned Greek workers retiring at 55 years of age, while Germans have to wait until they are 67. Turns out that is
a bit of a distortion. The mandatory official retirement age is 65 in Greece, as it is in Germany.

The average retirement age in Greece is 61, meaning some are retiring earlier. My heart goes out to a German worker, getting up to go to work on a cold Northern European winter morning, thinking about a 50-something Greek retiree on a warm Aegian beach.

Economists in Germany tell me that while annoyance at the cost of these intra-European rescues is understandable, it may be illogical. If Germany, one of Europe’s most powerful countries, were to throw in the towel on the European unification experiment, it could set in motion a series of consequences that many German families would find horrifying.

If the Euro currency fell apart, guess which currency would likely shoot through the roof in value? A German currency, some new Deutschmark or whatever they would call it. And if the Germany currency got strong fast, guess what would happen to the cost of Germany-made goods? They would get more expensive for foreigners to purchase. Higher prices would mean lower sales, which could torpedo the engine of Germany growth: its export economy. That could cost many a German job.

European leaders continue to express confidence in the Euro and work to bind the economies of Europe even more closely together. The betting here still is the Euro will survive this season of storms.

Photo: Sign of the Euro in Frankfurt (David Brancaccio 2011)

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