Would suck to be a rentier in that economy, but fuck the rentiers.

- Jake

Friends come and go. Enemies accumulate.

That would certainly be a problem for existing investments in Euro-zone countries were Germany to leave the Euro-zone. But most of the depreciation would likely occur immediately, rendering EZ countries X-Germany attractive targets for new investment. And, while German investors may take an immediate hit on the value of its foreign assets, should  not  assets become more competitive and, thus, their net present value should increase to offset the immediate loss due to currency revaluation?  

I agree that, medium to long term, there are probably hard limits as to how high a new Deutchmark could go relative to other countries without Germany becoming uncompetitive in its core products. Although a lot of those losses could well be to relocated subsidiaries of German parents. But would that not start bringing the downside of globalization home to Germany and result in a hollowing out of German Industry?

"It is not necessary to have hope in order to persevere."

As such, a lot of the talk about Germany's ability to remain an export champion at higher exchange rates is largely either:

• naive extrapolation from a simpler time (W. Germany)

• macho myth making rooted in a belief that price doesn't matter if quality is high enough. That's true for some sectors and segments of other sectors, but when you add all that up, it's a smaller market than people think.

• ignorance of the new world of global trade. The key point here is that to remain competitive companies (e.g. Mercedes Benz) have developed factories in other parts of the world (e.g. USA, China) and the profits from those factories may stay constant, but their value on the company balance sheet changes if the exchange rate moves up. Nobody I know of has written about this regarding Germany, but there are some commentaries on Japan (particularly Sony) that highlight how this causes problems.