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I think Cyrille meant, would our elites choose competitive devaluation? I think recent evidence in non-Eurozone countries points to "no". Austerity is the solution for every economic problem here, too. (In Hungary, the last competitive devaluation was combined with the most severe austerity up to then, in 1995; at least three more rounds of austerity without devaluation came since.)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu May 29th, 2014 at 06:47:41 AM EST
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The difference between austerity under a common currency and austerity under a unilateral exchange rate peg is that it has to get a lot worse before a country is ejected from a common currency than it has to get before a country can no longer defend its unilateral peg.

That's the difference between the depression of the American trade bloc following the panics of 1929, and the depression of the Asian developing economies following the end of the Yen carry in 1998.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 29th, 2014 at 09:07:27 AM EST
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We need to understand that the Euro project is essentially a competitive devaluation for Germany.

As long as the current architecture stays in place, German industrial exports will profit from an undervalued currency, while the rest of us struggle with what is for us an overvalued currency.

End the Euro, let the DM float, you will see what happens. And, for the rest of us, it will be the best thing we can do to kick-start exports.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Fri May 30th, 2014 at 03:47:38 PM EST
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