January 2016

[admin]

We explained (in detail here) how Germany is profiting doubly by locking in competitiveness advantage

• Gaining 20-30% competitiveness vis-a-vis the peripheral countries in the first decade, now locked in because the latter can't devalue versus Germany
• The resulting eurocrisis as the peripheral countries try to win back competitiveness through internal devaluation prompting the ECB to embark on QE which lowers the euro, with Germany as the main beneficiary.

But here is a competing view:

For the reasons explained above, Germany's massive car industry, which accounts for 2.7pc of GDP by itself, and 20pc of exports, is about to go into steep structural decline – and the one thing Germany doesn’t have is any significant internet companies to exploit the boom in self-driving cars (the only European countries likely to do well from that industry are Britain and Sweden). Selling machine tools to China can’t work as an economic strategy much longer. The rest of the eurozone won’t tolerate German trade surpluses sucking the life from their economies forever – sooner or later there will have to be a re-balancing, and it will be the loser from that. And that is before you mention declining demographics – Germany is set to become the new Japan, with a sharply falling total population that will make it a smaller country than Britain over the next three decades. Take a look at shorting German government bonds in particular. Zero and sometimes even negative interest rates lending to a country heading into that kind of trouble is crazy.

These are the big bets against the market you should be making right now - Telegraph

But our question is simply this: what are the rest of the eurozone countries, who "won't tolerate  German trade surpluses sucking the life from their economies forever" actually going to do about that??