A huge problem in the euro zone: Discount rates (degrees of preference for the present) differ widely between the countries whereas interest rates are the same

The discount rate or degree of preference for the present can be gauged in the euro-zone countries (we look at Germany, France, Spain and Italy) by looking at: Fiscal policies (an expansionary fiscal policy reveals a high preference for the present so a high discount rate); Household savings rates and household and corporate debt (a low savings rate or rising debt reveal a high preference for the present). We then find : A high preference for the present ( a high discount rate) in France and increasingly in Italy; A low preference for the present ( a low discount rate) in Germany and Spain. Interest rates are practically the same in the four countries. If the interest rate is lower than the discount rate, the result is normally massive borrowing; if it is higher, massive deleveraging. It is difficult for countries with different degrees of preference for the present to share the same currency.