Germany loves that Euro.New November factory order data came in ridiculously strong, with a 20% y/y gain, strongly surpassing the 15.9% estimates. Sequentially, growth was a staggering 5.2%.
Do you think the country’s growth would look anything like this if it returned to the Deutsche Mark? Ha!
Just ask Switzerland, where its own PMI was surprisingly weak (for December). That would be Germany if it had its own currency.
So Merkel will complain and kvetch, and mollify her country-mates, and then ultimately the ruling class will cave to bailouts of places like Ireland and Portugal, and basically accept a cheap currency.
(Of course, there’s a problem, which is that the euro is probably still too strong for places like Portugal or Ireland, so really the currency works for nobody.)