Reason for an Attempt at Political Union

Update: ZEW: Investor Outlook For German Econ At Six-Month Low | MNI.

German investor outlook is in the tank. German exports are slowing. Since exports account for about 40% of German GDP growth, it looks like Germany will be following the rest of the Eurozone into a recession.

Germany could not bail out the entire Eurozone under perfect conditions, and now it is entering a recession. A bailout will not work. On the other hand, the breakup of the Eurozone with each member resorting to its old national currency will leave Germany on the hook for $792bn Target2 payments and counting.

Where does this leave us? The only other option to preserve the Eurozone would be a fiscal union with a political union. This won’t work either, but the politicians are in the pockets of big business and big banks who think it will.

There is simply to much debt in the Eurozone and not enough time.

 

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