This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Germany's PIIGS Role: Q&A With Gary Becker

Q3: At the macro level, Germany has unprecedented political power. Do you believe that German leaders foresaw this attainment of fiscal and therefore, political leadership of Europe? Was this part of Germany's strategy?

A3: Certainly the Germans were concerned at the ratification of the EU common currency whether they would be able to control the weaker European countries. German leaders may well have anticipated that the common currency of the eurozone would ultimately lead to greater power for Germany both politically and economically. In fact, some other countries like Great Britain may have refused to join the eurozone because they would not want to be in a monetary union in which Germany had dominant power. A desire for greater power in Europe is likely to have gone into the German decision to join the eurozone. Germany is the most powerful player in the union with France as a secondary power. A weaker country like Italy may have thought that conditions required by the eurozone have the benefit of more likely assistance from stronger countries in the event of a crisis.

Q4: Can the PIIGS avoid being slaughtered? If so, how will the process evolve? It is doubtful that Germany alone can bail them out, despite Germany's political hegemony.

A4: The major issue confronting the EU is what happens next. There may be a sustained prolonged recession in Southern European countries. There will be a greater call for fiscal centralization, which will be led by Germany, leaving Germany in an even more secure position as the leader of Europe. There is no doubt that fiscal centralization will lead to far more power for a country like Germany. Their main concern will be that economic policies are not dictated by the other countries of Europe. Germany has a very conservative fiscal and budgetary policy. They will agree to centralization only if they think that they can dictate joint EU policy. They will be an excellent position to do just that due to their fiscal superiority within the eurozone.

Q5: Do you see an interesting investment opportunity in light of the European Financial Crisis?

A5: There are lots of great opportunities to invest in Eastern Europe but investing in the southern countries is likely to be unattractive for several years, if, as I expect, those countries suffer from a prolonged economic downturn.

Nathana O'Brien, a Phi Beta Kappa graduate of the University of Chicago who will attend Yale Law School next year, contributed to this article.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $124.43 -1.54%
FB $82.22 -1.18%
GOOG $548.00 -0.73%
TSLA $188.77 -0.94%
YHOO $44.44 -1.15%

Markets

DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs