[euccastro]

I'm not disagreeing categorically, but I don't think it's that one-sided.

I was (i) considering the cascading effect of a Greek exit from the Euro, and (ii) thinking in relative terms: I'm not arguing that Germany will be worse off, but perhaps it has more to lose at this point.

Re: the cascading effect:

http://yanisvaroufakis.eu/2011/08/04/why-italy-why-spain-and...

I'm aware that this article describes the dynamics of countries going to the receiving side of EFSF, not of countries leaving the Euro altogether, but I think the perverse dynamics described apply to the latter too.

Relying heavily on exports, as Germany does, may mean you have more to lose in a crisis like this. Consider what happens after a few more European countries stop generating demand for German goods, at the same time that demand from the US is weak too. Demand from the rest of EU and from the US was a big part of what made Germany 'a country like Germany'.

https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvir...

Yes, imports would be unaffordable for Greece with the new currency and that will generate a lot of pain (not that devoting a big share of the national budget to servicing debt is helping a lot), but that will also force the country to correct that imbalance, making what's left of local industry more competitive. That pain would be a price to pay for adapting to a more self-reliant setup, while the one currently being endured (mostly on ideological grounds, I claim) seems more pointless.

Re: tourism, having their own currency to devaluate might help with that.

Re: standard of living, it's not like Greece's current situation, and their prospects within the demands of the memorandum are rosy either.

Corruption and nepotism won't help, but they aren't helping within the Euro either. If anything, those problems are made worse in colonial economies, which the deficit countries in Europe have been, for good and ill, to a large extent.

All in all, a Greek exit from the eurozone is a big lose-big lose proposition for anyone. I don't think it matters a whole lot who stands to lose more. But to the extent that it matters, I think it must be considered in relative terms. Overall, Germany has a better deal in the Eurozone than Greece, and it has more to lose.

[jules]

Well, Greece has a trade deficit of more than 20 billion on a 200 billion economy. Of that trade deficit, only 1.5 billion or so is to Germany, which is nothing in a 4 trillion economy. I am not sure whether there will be such a cascading effect from leaving the EU. Sure, if Greece defaults on its debts to other EU states, then those states may need to default on their debt themselves, but the market already knows that there is a big chance that Greece will default on its debts or that they need to be forgiven, and Greece is a small country. Even in the worst case when many of the insolvent states exit the EU, the vast majority of German export will still remain. For sure Germany has more to lose if the EU turns into total chaos scenario, but even if there is a big cascading effect it's hard to imagine that, so most of Germany's export will remain even in the face of several states leaving the EU. That's why I think that the life of the average German will not be impacted nearly as much as the life of the average Greek.

You're right though that this discussion of who will hurt more is irrelevant. What has become clear is that a monetary and political union does not result in a more stable Europe. Perhaps the goals should be scaled back to the original goal of increasing trade by reducing transaction costs, rather than trying to have Europe follow the US model.