Most European countries are wishing they never hitched wagons with deflationary export powerhouse Germany. Behind the scenes, it turns out even one half of Germany hates Germany.
That would be East Germany, which adopted the deutsche mark 20 years ago today, causing inflation and decimating its less-developed industries.
[T]he move had a devastating effect on the economy. Overnight, all pensions, wages and savings of up to 6,000 East German marks were exchanged on a one-to-one basis. This was beneficial for East German citizens but not for businesses, many of which went under when they suddenly found themselves having to compete with the highly modern West German economy.
“Although there was no reasonable political alternative to the fixed exchange rate, it was a bad move economically,” says de Maizière. “Instead of one to one, the exchange rate should have been one to three or one to four, to reflect the economic reality, but this would have had the devastating political consequence of further migration.“
East Germans must also hate the euro and, presumably, Angela Merkel’s aggressive austerity policy. Those feelings have been coming out in polls and ballots all week.
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