Germany’s Flourishing Economy...and Where it Could Be Heading

While many nations in the Eurozone are struggling economically, with Ireland officially filing for an 85 billion Euros this past week, Germany is strong and flourishing.  BBC reports from German economic minister Rainer Bruederle saying that Germany is nearing full employment.  The article continues to discuss that though there has been much backlash at the German government for helping bail-out Ireland, domestic spending and faith within the German market has increased tremendously over the past months.  The country’s economic growth from July to September was 0.7%, which was 0.3% higher than the Eurozone average.  The country had come off a record growth of 2.3% in the previous quarter.

With the increasing growth of the German economy, questions may arise as to why it should be involved with the Eurozone.  On Bloomberg Television’s “The Pulse”, a discussion was held on what Germany should do amongst this mess.  While arguments are made that Germany has the opportunity to pull out of the Euro, matters that the benefits of Germany supporting the debtor countries are still crucial for Germany.  A lot of owed debt by Ireland is to Germany, and the benefit to support Ireland is probably ideal.  Both Graham Turner, a chief economist, and George Magnus, a senior economic adviser, believe that there needs to be a focus on credit-debtor relations, and the restructuring of banks are a necessity for the Euro to survive.        

What has to be concerning is the amount of power that Germany has within the Eurozone.  Many fingers point at Chancellor Angela Merkal for stating in October that Ireland will not be able to make it out of their current economic crisis.  This in turn led to investors losing more and more faith within the Irish economy, and can be stated that it has led to the situation that is today.  Perhaps Germany should use this influence to strengthen their ties with the weaker Eurozone countries rather than hurt them.  Magnus believes that the Euro will fall if Germany were to leave the Eurozone, the currency itself would completely collapse.

Where do you think the Eurozone would stand without Germany?  The Eurozone has hindered many countries in different ways.  Should Germany leave the Eurozone, or perhaps is it time for the smaller countries to try to leave the Eurozone?

 

 References:
    "Bloomberg Television": http://www.youtube.com/watch?v=yQ6mJn4C_SY

     BBC News: http://www.bbc.co.uk/news/business-11838365