….is that it’s been a blessing in disguise for the EU. Before the crisis the Euro was heading towards 1.50, now it is down to a more reasonable 1.35. If Greece defaulted on its debt, it would probably go down to 1.2. Would that be bad for Europe? Most would say no. In a world of competitive devaluations in which China has been amassing $2.4 trillion in reserves thanks to an artificially devalued currency, exporters in the EU would welcome the fall of the Euro. Moreover, the only real danger of a declining currency, inflation, looks very well under control: labor costs are down because of unemployment and energy costs are down because of lack of demand. No wonder it’s taking so long to bail out Greece.
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