Salient to Investors:

Peter Bofinger at University of Wuerzburg said:

  • Germany would be the biggest loser in a euro breakup.
  • Germany’s national obsession with austerity stems from a misreading of Germany’s recent history.
  • Germans rarely acknowledge how they have benefited from the euro with lower exchange rates and record-low interest rates – the benefit of having a five-star economy with a three-star exchange rate.

Paul Welfens at the University of Wuppertal said the euro crisis is not just a problem of individual countries but a systemic problem that needs a systemic solution.

Henning Meyer at the London School of Economics said:

  • the ECB’s bond-buying program has relieved pressure on Merkel for a longer-term solution to the euro crisis – there’s little political or popular will for the hard choices needed.
  • Merkel and most German politicians have done nothing to highlight the fact that German financial institutions have been major investors in the rest of Europe, and ignored the country’s economic dependence on its neighbors and the role German banks played as lenders.
  • The resilience of the German economy has lulled Germans into complacency, and while business and consumer confidence has begun to decline, there has been no crisis feeling.

Bllomberg says a majority of investors, analysts and traders expect Germany to tip into recession for the first time in 3 years. The IMF forecasts Germany will expand 0.9 percent in 2013.

Hans-Werner Sinn at the Ifo Institute for Economic Research warned that EU’s proposed banking union would benefit Wall Street, the City of London and ailing banks at the expense of German taxpayers.

Beatrice Weder di Mauro at the University of Mainz said the whole construction of Europe is about creating institutions that bind behavior.

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