The breakup of the euro zone is currently being debated as vigorously as ever. But all possible scenarios involve a resolution immense risks and costs - particularly a German single-handedly.
What happens next in the European Monetary Union? These days start after a brief summer break, the frantic search for a way out of the crisis. The French Government and the Germans fight for a united front, the Greek Prime Minister travels to the European capitals and woos trust for his country, and all are waiting for the report of the troika to Greece.At the same time obvious that the financial problems of countries like Spain and Italy are always difficult to get a handle on and that's why the political pressure on the European Central Bank increased immensely to launch a stronger monetization of government debt in the way.Uncertainty leads to wildfire
In public, however, are more and more scenarios of the breakup of the euro zone discussed, even if this were true, the policy has not yet willing or able. The first scenario is the (forced or voluntary) exit of Greece. Such an exit could provide relief in the short term, but does not solve the structural problems of the other countries under pressure. The direct costs of the spill would be for the remaining countries only tolerable if it would not come to contagion in the euro zone.Because of the following from a withdrawal of Greece increased investor uncertainty and the integration of financial systems, however, one should factor in high indirect costs, as it can lead to a conflagration with huge financial consequences.
The second scenario would be a withdrawal of Spain, Ireland, Portugal, Cyprus, and perhaps Italy. This would probably help prevent further contagion, the direct costs would be enormous, but here.A third possibility, which is especially brought into play by the Anglo-American commentators, is the withdrawal of Germany with a gradual return to the D-Mark. This would mean that the (remaining) euro would depreciate sharply and thus many European countries could regain competitiveness.
This would allow a breathing space to its structural problems socially acceptable address. For Germany, this would be associated with extremely high risks: The upward pressure on the D-mark would have to be mitigated, the export-oriented industry would suffer greatly, increasing unemployment and the financial sector would probably once again be supported.
Union Bank and Euro-Bonds
All these exit scenarios are therefore very unattractive. What remains to be done? The currently still cheaper option first is the introduction of a European bank Union under central supervision, secondly, the introduction of euro bonds conditioned on structure and adjustment programs that promote the competitiveness of certain countries and put the debt dynamics repealed without causing social unrest. This is a Herculean task and requires an intelligent, but also hands-on common policy, however, is the only way if one wants to save the euro zone, really.
Marcel Tyrell: Since 2008, the heads of the economist "Buchanan Institute for Entrepreneurship and Finance" at Zeppelin University at Lake Constance. The Institute focuses on the intersection of corporate finance and corporate research. Tyrell was previously a professor at the European Business School, visiting professor at the Wharton Business School (USA) and a lecturer at the faculties of economics in Frankfurt and Trier. The trained winemaker doctorate for information processing in banking.
What happens next in the European Monetary Union? These days start after a brief summer break, the frantic search for a way out of the crisis. The French Government and the Germans fight for a united front, the Greek Prime Minister travels to the European capitals and woos trust for his country, and all are waiting for the report of the troika to Greece.At the same time obvious that the financial problems of countries like Spain and Italy are always difficult to get a handle on and that's why the political pressure on the European Central Bank increased immensely to launch a stronger monetization of government debt in the way.Uncertainty leads to wildfire
In public, however, are more and more scenarios of the breakup of the euro zone discussed, even if this were true, the policy has not yet willing or able. The first scenario is the (forced or voluntary) exit of Greece. Such an exit could provide relief in the short term, but does not solve the structural problems of the other countries under pressure. The direct costs of the spill would be for the remaining countries only tolerable if it would not come to contagion in the euro zone.Because of the following from a withdrawal of Greece increased investor uncertainty and the integration of financial systems, however, one should factor in high indirect costs, as it can lead to a conflagration with huge financial consequences.
The second scenario would be a withdrawal of Spain, Ireland, Portugal, Cyprus, and perhaps Italy. This would probably help prevent further contagion, the direct costs would be enormous, but here.A third possibility, which is especially brought into play by the Anglo-American commentators, is the withdrawal of Germany with a gradual return to the D-Mark. This would mean that the (remaining) euro would depreciate sharply and thus many European countries could regain competitiveness.
This would allow a breathing space to its structural problems socially acceptable address. For Germany, this would be associated with extremely high risks: The upward pressure on the D-mark would have to be mitigated, the export-oriented industry would suffer greatly, increasing unemployment and the financial sector would probably once again be supported.
Union Bank and Euro-Bonds
All these exit scenarios are therefore very unattractive. What remains to be done? The currently still cheaper option first is the introduction of a European bank Union under central supervision, secondly, the introduction of euro bonds conditioned on structure and adjustment programs that promote the competitiveness of certain countries and put the debt dynamics repealed without causing social unrest. This is a Herculean task and requires an intelligent, but also hands-on common policy, however, is the only way if one wants to save the euro zone, really.
Marcel Tyrell: Since 2008, the heads of the economist "Buchanan Institute for Entrepreneurship and Finance" at Zeppelin University at Lake Constance. The Institute focuses on the intersection of corporate finance and corporate research. Tyrell was previously a professor at the European Business School, visiting professor at the Wharton Business School (USA) and a lecturer at the faculties of economics in Frankfurt and Trier. The trained winemaker doctorate for information processing in banking.
