Wall Street Journal
February 18, 2011
Sometimes a research note drops into your inbox that just makes you want to reach for your tin hat, crawl under your desk and wait for the carnage to stop.
Thus it was last week, when Patrick Artus, chief economist at French bank Natixis, published a note entitled, with disarming honesty, "Germany should accept federalism in the euro zone for its own self-interest."
One has to give Mr. Artus high marks for having the courage to come over to the lions' den in Frankfurt and market his ideas in person.
The note quite correctly argues that Germany has an interest in sustaining euro-zone demand for its exports (although the relentlessly increasing share of German exports going to emerging markets makes this argument a wasting asset). It also correctly identifies the risk to German welfare of a default elsewhere in the euro zone, and the near-impossibility of advanced economies "re-industrializing" once they have lost their industrial base. Neither point is sufficiently appreciated in Germany.
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