When the Spanish joined the Euro it was never
explained to them that this meant an end to the
mechanism of devaluing the exchange rate as an
instrument for competitive adjustment of the
country’s economy during times of crisis.
Greek and Spanish citizens should have received more
information from their politicians about the risks
involved in joining the Euro. Because once you are in,
getting out is very traumatic and generates too many
problems.
It is curious to hear economists, or journalists
specialising in Economics, often say that Spain is not a
competitive country, and defend their argument by
saying that Spain has a trade balance with a deficit (it
sells less overseas than it buys) and for that reason we
are not competitive. The trade balance has more to do
with the saving patterns of a country’s citizens and of
the perception lenders have of that country than with
its overseas competitiveness.
Germany has financed itself with money from the
peripheral countries and has had a currency which is
much more devalued than the Deutschmark would
have been. If Germany had been outside the Euro, it
would have levels of exports as a percentage of its
GDP which are much lower than those it currently
has, and during the crisis its exports would have
suffered more.