It Is Time for Germany’s Withdrawal From Eurozone – US Economist

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US economist Patrick Chovanec views Germany's growing trade surplus as the main cause of the imbalances in the Eurozone, DWN reported.

In 2014, Germany recorded a trade surplus of 217 billion euros and was the world's number 2 economy behind China. A trade surplus arises when a government spends less than it earns from exporting goods. The excess reserves are then spent for loans and awarded to other states.

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In such a way, Germany has financed countries that spend more than they produce and thus experience a trade deficit, DWN reported.

However, instead of a positive contribution to global economy growth, the German trade surplus has had the opposite effect, US economist Patrick Chovanec wrote in the Foreign Policy magazine.

"The Eurozone crisis is often called a debt crisis. But, in fact, Europe as a whole did not have an external debt problem, but an internal one,” Chovanec wrote.

According to him, German surpluses and rising debt in peripheral European states were two sides of the same coin. Instead of investing this money in the domestic economy, Germany gave it out to its trading partners in the Eurozone which, in turn, used the money to purchase German products.

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Chovanec argued that Germans lived in the illusion of prosperity. Instead of doing “real work”, they tried to get off with money that will probably never be repaid.  

According to the expert, the best solution would be for Germany to withdraw from the Eurozone and reintroduce the German mark. He argued that trade surpluses are already available anyway, but the question is where they will be spent.

Domestic investment would be a more desirable option which would contribute to a real European recovery, Chovanec stated as cited by DWN.

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