It's not that simple. Germany wanted a country like Italy in the Euro so it would pull the currency down and not allow it to appreciate too much (like the Deutsche Mark did). That would would be very bad for German exports.
At the same time it was made much easier (at lower interest rates) for southern European countries to borrow money from northern European countries and other markets, as creditors would feel more secure that they'd get their money back. Creditors would assume the northern European countries would bail-out southern European countries in case of problems.
And that caused southern European countries to lend more which might benefit a country like Germany again. These countries could lend more easily to buy luxury cars, for example.
Generally speaking, access to cheap debt is seen as a uniformly good thing.
But this is the same as drug dealer saying their dead customer was not responsible enough. Yeah it true, but some people just are not responsible for their own actions and the dealer was happily benefiting all the time from him
I'm not pointing the "overspending" finger either, just saying, countries should take responsibility for their actions, not complain at the enablers.
What am I missing?
Except that the dead customer still owes 590 billion to (mostly) the drug dealer mentioned above and won't be able to pay it.
And the goods delivered were not drugs but things that usually don't alter your way of thinking (like cars, machines, ...), even less if we're talking about a group of people (like the government or a country of 60mn people)
Oh and there was also trading (i.e. delivering goods back), so Italy is not only consumer but also producer.
Which is why the weaker currencies were a much better fit for Southern European countries. Creditors would expect a high interest, due to high inflation, thus limiting the politician's ability to borrow money.
I do feel northern Europe (especially Germany) is partially to blame, since they were very much interesting in increasing their exports and the Euro was the enabler.
This does not absolve the politicians, nor the electorate.
They both share the blame. If a bank clerk keeps giving loans to a drug addict something is definitely off. Especially if it suggest settling the debts via organ sale (austerity).
Lira pesante Due to the lira's low value after the war economic calculations and price displays became unwieldy because of the large number of zeroes. As early as the 1950s suggestions were made to redenominate the lira but no serious efforts were made at that time. In the 1970s a plan known as lira pesante [it] (English: hard lira) or lira nuova (new lira) was proposed. The lira pesante would have redenominated the currency at 1,000:1, removing 3 zeroes. However the project went dormant for several years before being revived in 1984. Ongoing heavy inflation saw the lira pesante pushed back until it was permanently abandoned in 1991 because of plans for a single European currency.
But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.
You can google for longer explanations of why a weak currency is excellent for exporters, this is well established.
When a country's currency appreciates in relation to foreign currencies, foreign goods become cheaper in the domestic market and there is overall downward pressure on domestic prices. In contrast, the prices of domestic goods paid by foreigners go up, which tends to decrease foreign demand for domestic products.
A depreciation of the home currency has the opposite effects.
It contradicts directly your claim that exports don't get cheaper. You're saying exports remain the same (because they don't get any cheaper), and that the only change is an increase of corporate profits at the expense of wages.
[1] https://en.wikipedia.org/wiki/Currency_appreciation_and_depr...
> Export dependent nations may actively encourage a weak currency in order to boost their exports.
> A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets
Where does it support your claim that a weakened currency does not affect the price of exports?
It says the exact opposite. Exports increase because they become less expensive:
> A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets
>But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.
Another thing is that if production costs go down (although you don't say why they're going down, it seems a random assumption on your part), then competition among exporters will drive the price of exports down. I mean, this is Economics 101.
I spent 5 minutes googling this out of curiosity and could only find published claims in favor of the orthodox "weak currency boosts exports" idea, for example "Export dependent nations may actively encourage a weak currency in order to boost their exports." [0] or "Exports become cheaper when the currency of a nation is weak."[1]
[0] https://www.investopedia.com/terms/s/weak-currency.asp [1] https://thebusinessprofessor.com/en_US/economic-analysis-mon...
If there are published claims to the contrary, I would be interested in reading them.
They had large pension and state-payroll obligations, and they couldn't cut that spending and stay in power. Greece tried to cut it's spending, and the government was ejected. The new socialist government was then destroyed by German bankers and politicians.