What are the limits to Germany's non-cooperative choices?
Germany's non-cooperative choices with respect to other euro-zone countries are well known: Refusal to reduce Germany's external surplus through a more dynamic demand-side policy; Refusal to lend Germany's savings surplus to other euro-zone countries, as this surplus is being lent to the rest of the world outside the euro zone, in particular to the United States; Very great reluctance to mutualise euro-zone countries debts, and rejection of mutualisation that would lead to transfer payments from one country to another; Rejection of ECB interventions aimed at facilitating financing of governments through the monetisation of government bonds. Will Germany's resolutely non-cooperative choices come up against obstacles that would force Germany to cooperate? If Germany makes these non-cooperative choices, it will be confronted with: Persistently weak growth in the other euro-zone countries; Diverging situations in the euro-zone countries that could lead to a political crisis and a risk of a break-up of the euro; A widening of the peripheral countries' yield spreads and a debt crisis in these countries. The announcement by Angela Merkel and Emmanuel Macron of a proposed EUR 500 billion Europe-wide plan shows that Germany seems prepared to make cooperative choices with respect to the rest of the euro zone.