"We all know that Euro membership has
been of doubtful benefit to periphery countries such as Greece and Portugal.
But Germany has been a net beneficiary of the Euro, hasn't it?"
"And it is also a story of
too-tight fiscal policy. Instead of increasing its own borrowing to compensate
for the fall in NFC borrowing, the German government gradually reduced its
fiscal deficit - indeed in 2007 and 2008, it was net saving (running a
surplus). On the face of it, this looks sensible: after all, we are led to
believe that governments should net save during booms. But not, emphatically
not, when there is a growing current account surplus. A persistent current
account surplus is contractionary over the medium-term, because it by
definition means that productive investment is leaving the country."
