This article outlines the reason Germany will bailout other EU countries. Germany has done fairly well for themselves during the crisis; they have been able to keep their economic numbers a lot better than other countries - Spain, Greece, Portugal.
The article presents many examples of how the rewards for saving the Euro outweigh the costs (negatives). In most possible scenarios, Germany will do better if it loans money out to struggling EU members; Germany could even turn a profit on certain loans.
Link: http://www.nytimes.com/2012/06/27/business/economy/why-germany-will-pay-up-to-save-the-euro.html?pagewanted=all
3 comments:
The euro has been extremely beneficial to the German economy. The article explained well how a German bailout will not only be beneficial to the whole Euro zone, but also to Germany as well. If Germany were to adopt the new deustchmark, then its export-oriented economy may not be performing as well as it is. I found it interesting that "Germany had given Greece so far the equivalent of 29 times the aid given to West Germany under the Marshall Plan after World War II". Although the amount is large, the profit should be larger.
The article brings up a lot of good points as to why Germany should help to hold the Eurozone together and bailout Greece, but I'm interested to know more reasons as to why they should just let the IMF bail Greece out. If they are bailed out, what assurances does Germany and the rest of the Eurozone have that they won't be in economic trouble again. But, if they can actually recover their bailout money or even turn a profit then I don't see why they wouldn't bail Greece out.
Germany is now one of the flagship in EU, simply because their economy is doing much better than other economies in EU. Given the euro has been very beneficial to Germany, the cost of bail-out is not a big deal to Germany, and saving the euro will brings even more benefits to the country, there is no reason that Germany wouldn't give Greece a hand. The problem might be the predictions of whether Greece and some countries being in a trouble can recover and maintain its recovery.
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