Normally a big country's currency will appreciate once they start running prolonged large trade surpluses, but the Euro has enabled Germany to keep siphoning in wealth in a way that wasn't possible before the Euro. Similarly pre-Euro the southern countries would have seen their currencies depreciate and get a break in competitiveness.

Hartz is also part of it, Germany has kept labour costs down while southern countries in the same currency area experienced high inflation due to masses of cheap money coming in again due to the Euro.

And of course Germany has been leading the austerity brigade in response to the crisis.

http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03...

http://www.forbes.com/sites/timworstall/2011/09/12/greece-wa...

I think most of southern Europe should be not in the euro zone at all, their economy would have better time on a weaker currency.

http://stephansmithfx.com/articles/how-a-weak-currency-affec...

Of course the voters should never have elected them in the first place, but look at the loons that American voters keep voting for. And the Greek crooks were given both the means and the motive to cook the books, because there was status attached to joining the euro, and the rules were not being enforced so strictly back then. And the easy loans after joining the euro let them pretend to their voters that all was fine.

I yet to see how the bad greek government is anybody else's problem other than the voters who put them in place and the country itself. Politicians like to take credit for every progress but never take the blame.

Imagine if you did the same thing as a leader of a corporation. Why is it different than bad leaders of a country? Just because politicians are historically untouchable?

What is the guarantee that it wont happen again with the current government? Did anything change?

Even if Greece had no corruption at all they would still be in a nearly indistinguishable position. They still would have been flooded with debt (simply a consequence of interest rates dropping during the boom) and they would still get a crushing depression (because that's what happens when you share a currency with larger and economically stronger countries).

When Greece joined the Euro the outcome was nearly inevitable, so blaming Greece for this makes little sense. The austerity policies the troika imposed on the Greek people were brutal and completely unnecessary, though. So that's the outrageous part.

To fix the humanitarian crisis in Greece they need money in the short term, and the opportunity to do substantial reform in the long term. This ultimately benefits everybody in Europe, but it's not an easy sell. The press coverage of the crisis has been so toxic that most people in Germany, Belgium, France, etc, believe that any money going to Greece will by definition get squandered. On top of that there are prejudicial stereotypes about Greeks being lazy (false: in a country with poor infrastructure you have to work more hours to get even a little work done) or that they've benefited immensely from the Euro (false: Germany is the big beneficiary because they're the biggest exporter. The "opportunity" Greece got to borrow cheaply was a trap, and Greece's economy is wrecked now).

So even the politicians who understand the economics don't dare suggest major debt forgiveness and fiscal transfers. This isn't even an outrageous solution, if you remember that states like Mississippi and Alabama net more than 500bln from the federal government, every year. This subsidy is much larger than the entire GDP of Greece. The US is willing to subsidize poorer member states, and the EU should do the same. Otherwise the Euro will fall apart, and the humanitarian catastrophe will worsen.

s/Greece/people running Greece at that time/ If you asked the who didn't profit from joining the Euro, likely you might have gotten a negative reply.

Seriously it's not a fault issue here because multiple parties (including the vampire squids that are multination financial corporations like Goldman) conspired to profit from it.

Question is what is going to be done to right the ship and avoid calamity?

After ~ 8 years of Troika mismanagement the country is in dire situation and there has not been the slightest perception of improvement. So even if SYRIZA choose to blink, the next government wont.

> Germany's improvements have more to do with Germany's changes to industrial reform than to do with Southern Europe [...]

Then let Greece default (as a Greek I believe that's best for my country in the long term) and see how that plays out. BTW the lack of understanding of 101 macro-economics by Scheuble is disheartening[1]. Every time he speaks, he is comparing economy-wise countries to businesses and/or households, which coming from a FinMin is plain ridiculous[2].

[1] http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03...

[2] COMPETITIVENESS - A DANGEROUS OBSESSION P. Krugman, 1994, Foreign Affairs Magazine http://www.pkarchive.org/global/pop.html

This is simply false, and I wonder where you got this idea from. During the 1960s, the (West) German unemployment rate hovered around 1%, i.e. much lower than today.

There's no doubt that Germany is doing well compared to other countries today, but be careful about such statements about history. Germany could be doing even better.

[1] http://www.tradingeconomics.com/germany/unemployment-rate

Spain's unemployment is largely due to overinvestment in construction-related industries. It was a stupid, greedy move (that the USA made as well), but it's one they can recover from. That's completely different from the problems facing Greece.

Greece just cannot sustain itself based on its current GDP, tax, and retirement arrangement. Unless that changes, they're a lost cause.

I'm sure there were some mistakes made by the euro policy makers in drafting austerity measure agreements for Greece, but I wouldn't let that distract from the main issue, which is that Greece just does not have a sustainable economy without continual devaluation of the currency they use.

The EURO is a common currency. If one country has better infrastructures, geographical position to begin with, etc. It's impossible for countries lagging behind to compete. The 'developed' country will always produce XYZ products at a lower price because it has better technology. So the weaker country will accumulate an export deficit while the stronger country will accumulate a surplus. Now, the 'strong country' will start employing more and more man-power, driving down unemployment because it becomes more and more competitive at product/service 1, product/service 2 and so on and so forth.

At the same time in the weak country will be harder and harder to produce (primary sector or secondary sector) and sell because products flowing in from 'strong country' are in the same currency and being at the same union, there's no import tax.

Now a 2nd year economics student, who has studied macro-economics, would tell you that at this point, the surplus sitting in 'strong country' should become investment in various forms in 'weak country' in order to allow 'weak country' to somehow cope with the difference. Indirectly 'strong country' injects money in it's primary market which is (if we're talking mainly about an exporting economy) the 'weak country' in form of direct or indirect investment.

What Germany does is accumulate money. Greece is the weakest link, but if Greece goes out of the picture, you'll see how Italy, Spain, Portugal and ultimately even France will look a lot like Greece in the long run because they can't compete with the Germans having the same currency.

The above scheme underlies the biggest EUR caveat: You can't have a common currency without having political integration. It's simply impossible because in the long you will always have situations like this. While Greece is a small country so no one cares, when Italy's of France's turn comes, the repercussions and turmoil will be far greater and no matter what the media outlets say, the general feeling I'm getting from all over Europe is that the EUR didn't integrate sh*t. The common currency achieved the exact opposite: It highlighted the worst part of every nation.

I urge you to read Bernanke's article: http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03...

Also: http://www.theguardian.com/business/2014/jul/24/germany-surp...

There are numerous other articles mainly by academics and of course Varoufakis from 2013: http://yanisvaroufakis.eu/2013/11/01/the-us-treasury-is-righ...

I could argue that Greece had better infrastructure and geographical position to "begin with". Most Germans alive right now are going to remember when their country was divided into two parts under two wildly different political arrangements.

You're arguing macro economics, but you're really having to shoehorn a timescale that works for your argument.

In all of this, I'm not saying that Greece is "bad", and I don't think they should be demonized. You mention a number of "weak" countries that may be next to go, implying that the whole Eurozone will collapse. However, I don't see those countries as weak, just very different economically. I also don't think the rest of the Eurozone would collapse. In short, I think a good deal of the coastal mediterranean countries would make sense together, as part of their own union. As long as I'm playing armchair cartographer, I'd put Greece, Italy, Slovenia, Cyprus, and the coastal micronations together. I think Croatia and even Turkey would make sense there. The currency pressure could be relieved, and the governments could operate on more comfortable tax and inflation guidelines.

I see France and Spain's problems as being more short lived. France should in all likelihood stick with the rest of the original Eurozone. Spain is complicated politically, with its three distinct cultures. I could see it going either way. I don't think it would be forced out though, it just might be a better match.

I'm horrified of the carelessness with which that option seems to be considered by the Greek government.

It's been pretty clear for a while now that the debt load for the Greek economy is too great and some sort of bankruptcy(default) is required. The ECB and others have conspired to hide this with the collusion of previous Greek leaders, by heaping on more onerous debt and calling it a bailout.

It will have to end at some point. What's occurred up until now is fraud with the intent that someone further down the road will have to deal with ensuing mess. But it's likely the game of kick the can will continue.

Ideally, the debt would be reduced in a controlled manner to a point where Greece can afford to pay off the remainder, but Germany seems to be set on steering towards a Greek default.

This made the exports possible and made a few people rich.

A lot of people argue it's unhealthy and will bite Germany in the long term.

Besides that: The average german is still far better off than the average greek.