The euro being undervalued is a relative statement. It’s undervalued for Germany in the sense that considering Germany current policies and trade balance, an equivalent German only currency would be considerably stronger. That’s a significant part of how Germany remains competitive despite investing so little in their productivity.
Conversely, it’s extremely overvalued for the economy of the periphery. If you look at their trade balance and policies, their own currency would be far weaker. Paradoxically this would be a boon for them. Sure it would impact their ability to import but it would make their exports far cheaper in relative terms.
Adding country with economy pulling down the value of the euro is therefore extremely advantageous to Germany at the expense of the periphery. This is by design. A currency union can’t work without transfers.
That’s why it’s extremely unfair to impose the euro as part of the criteria for joining and why you see country like Poland doing its best to not join. Sadly, Spain, Portugal, Greece and Italy are stuck in. I personally can’t refrain from strongly resenting the union every time I see someone from the advantaged core pretending to be morally virtuous while being the direct beneficiary of one of the most unfair transfer setup since decolonisation and pretend the south should just go with austerity which is the exact reverse of what’s actually needed (investment and devaluation).
I somehow understand how we got there and the weight the completely botched unification of Germany in 1990 carries in it. It doesn’t really make the pill easier to swallow.
Conversely, it’s extremely overvalued for the economy of the periphery. If you look at their trade balance and policies, their own currency would be far weaker. Paradoxically this would be a boon for them. Sure it would impact their ability to import but it would make their exports far cheaper in relative terms.
Adding country with economy pulling down the value of the euro is therefore extremely advantageous to Germany at the expense of the periphery. This is by design. A currency union can’t work without transfers.
That’s why it’s extremely unfair to impose the euro as part of the criteria for joining and why you see country like Poland doing its best to not join. Sadly, Spain, Portugal, Greece and Italy are stuck in. I personally can’t refrain from strongly resenting the union every time I see someone from the advantaged core pretending to be morally virtuous while being the direct beneficiary of one of the most unfair transfer setup since decolonisation and pretend the south should just go with austerity which is the exact reverse of what’s actually needed (investment and devaluation).
I somehow understand how we got there and the weight the completely botched unification of Germany in 1990 carries in it. It doesn’t really make the pill easier to swallow.