If the Germans do nothing at this point the Euro collapse will take down their banks as well.
The other incentive as I see it is that this could also be argued as a more politically palatable solution for the ruling party since they have been (rather disingenuously) selling the line that only the Germans were responsible in the run up to the crisis and pulling out of the Euro fits rather neatly into that model of the world. My understanding is that most Germans that support the ruling party see inflation as something that is bad for them and erodes their savings and they link Euro-bonds and Euro QE with that. Bringing back a strong Mark that does not devalue would present a facade of non-inflation since there would be no QE for the Germans and no German-sponsored Euro-bonds but the new Mark would bring actual inflation because the Euro would immediately devalue.
As has been pointed out elsewhere the big problem is that the Germans pulling out of the common currency would be a step backwards in the political union objectives. If you believe that there is even a remote chance of a European war between major powers then this is a bad thing (I do not).
I think it is clear that the better solution is more political union in Europe instead of trying to drag the current arrangement through the crisis as-is. We have unfortunately seen a real rise of an "I got mine jack" voting all over the western world and this crisis is really not being dealt with precisely because that philosophy is tied to the right-wing parties that have risen to power (and are now maybe starting to fall) in Europe.
> If the Germans do nothing at this point the Euro collapse will take down their banks as well.
Agreed, but leaving would be a big blow to their export market. Their best interest would be for the PIGS to stick around as weak as possible (to keep the euro devaluated) but still (mostly) solvent.
> The other incentive as I see it is that this could also be argued as a more politically palatable solution for the ruling party since they have been (rather disingenuously) selling the line that only the Germans were responsible in the run up to the crisis and pulling out of the Euro fits rather neatly into that model of the world.
Maybe, but I'm not seeing a strong push to leave from Germany. And let's not forget that there isn't any opt out procedure from the euro: do other countries have a say?
> I think it is clear that the better solution is more political union in Europe instead of trying to drag the current arrangement through the crisis as-is. We have unfortunately seen a real rise of an "I got mine jack" voting all over the western world and this crisis is really not being dealt with precisely because that philosophy is tied to the right-wing parties that have risen to power (and are now maybe starting to fall) in Europe.
I wholeheartedly agree with every single word of this, my fear is that we European aren't really ready to be that united and we'd all rather die leaving than get hurt to save another country in the "union" and as a result the EU will fail the only way it can: spectacularly.
A stronger union is the only way forward, for sure. One of the problems is that every national government in the EU found (and finds) it so convenient to blame the EU for every problem - and attribute every success to themselves - that right now public opinions aren't generally favorable to this route.
The other incentive as I see it is that this could also be argued as a more politically palatable solution for the ruling party since they have been (rather disingenuously) selling the line that only the Germans were responsible in the run up to the crisis and pulling out of the Euro fits rather neatly into that model of the world. My understanding is that most Germans that support the ruling party see inflation as something that is bad for them and erodes their savings and they link Euro-bonds and Euro QE with that. Bringing back a strong Mark that does not devalue would present a facade of non-inflation since there would be no QE for the Germans and no German-sponsored Euro-bonds but the new Mark would bring actual inflation because the Euro would immediately devalue.
As has been pointed out elsewhere the big problem is that the Germans pulling out of the common currency would be a step backwards in the political union objectives. If you believe that there is even a remote chance of a European war between major powers then this is a bad thing (I do not).
I think it is clear that the better solution is more political union in Europe instead of trying to drag the current arrangement through the crisis as-is. We have unfortunately seen a real rise of an "I got mine jack" voting all over the western world and this crisis is really not being dealt with precisely because that philosophy is tied to the right-wing parties that have risen to power (and are now maybe starting to fall) in Europe.