Writing in the New York Times yesterday, here are hedge funder Ken Griffin and University of Chicago Professor Anil Kashyap:
A better, bolder and, until now, almost inconceivable solution [to the Eurozone’s woes] is for Germany to reintroduce the mark, which would cause the euro to immediately decline in value. Such a devaluation would give troubled economies, especially those of Greece, Italy and Spain, the financial flexibility they need to stabilize themselves.
Although repeated currency devaluations are not the path to prosperity, a weaker euro would give a boost in competitiveness to all members of the monetary union, including France and the Netherlands, which is why they might very well choose to remain in it even if Germany were to gradually leave. A resurgence of manufacturing would also allow the vast unemployment rolls of Spain, Portugal, Greece and other countries to begin to decline. The tremendous loss of human capital and human dignity we are witnessing would ease.
Reintroducing the mark would not solve the debt burdens of southern European countries, but it would give them needed breathing room to restructure their economies, reform labor markets, collect more taxes and reassure investors. The ability of the southern European countries to service their sovereign debt would immediately improve, helping to end the slow-burning debt and banking crises that have engulfed the Continent since 2008….
…Germany’s industrial base would unquestionably endure hardship in the transition to a stronger currency. In the early years, Germany could use a variety of measures to manage the rate of appreciation of the mark, much as China or Switzerland do today. Over time, the industrial base of Germany would adapt and move forward.
This continues to be an alternative that is worth considering (here’s some discussion on this from May 2010; this has been a long, long crisis) and then, of course, there is our old friend the Northern Euro . . .
Meanwhile the head of the Spanish bankers’ association is in El Pais saying that a break-up of the euro-zone is not only possible, but probable.
On on the saga goes . . .