How Greece subsidises Germany through the Euro

If you listen to the likes of the europhile BBC, you get the idea that the sun shines out the backside of the Euro, that Germany is doing Greece a favour lending it money and that Greece is just a bad boy that won’t accept the magic which comes as part of the Eutopian vision of the BBC.
But the real truth is that far from Greece getting subsided by Germany, Greece is actually subsidising Germany by being in the Euro. And the reason is simple:
If you have two companies, one with a higher cost of production and the other with a lower cost then the one with lower costs can always drop its prices to the point where it is making money and the other is not. So, the one with higher costs has no option but to try to sell its products at a higher price and be undercut by the more efficient company. This is in effect what we have with Greece and Germany in the same currency. German, which has invested heavily in manufacture & economic infrastructure, vastly outperforms Greece.
But if Greece and Germany had separate currencies, the Greek currency would devalue until the price of its goods were below that of Germany. Then Greece would be able to compete on equal terms, because the drop in currency value brings down the cost of employment in Greece, brings down the cost of raw material in Greece and generally makes Greek produce cheaper than Germany’s and Greece becomes a great place to do business.
In contrast, the rise in value of the Deutschmark then makes Germany a bad place to do business: it’s prices are higher, the cost of goods and raw material from Germany are higher and generally even German companies start buying abroad.
Greece wins in a separate currency – Germany wins in the Euro
Currency devaluation would be a massive benefit to Greece, but a massive penalty to Germany – but you would hardly imagine it from the Eutopians like the BBC!
Germany massively benefits from the Euro, because by having the Euro, Germany’s currency and therefore prices are artificially kept down by all the poor performing currencies like Greece. So, the value of Germany’s products priced in Euros are lower than the value of those products if priced in Deutschmarks. The Euro is just wonderful for Germans, massively boosting their already over inflated economy, boosting the standard of living of Germans. Of course they love it!
In contrast, the artificially high value of the Greek currency, means their economy is in the dumps. Wages are too high to be competitive, so unemployment rockets. Greek goods (produced in uncompetitive companies in an uncompetitive economy) are too expensive to sell on the world market, they have no money coming in to invest to make the economy better and basically the Greek economy slumps and will just get worse and worse.
The exponentially increasing rift
So, the Euro is a complete disaster. When two economies as different as Greece and Germany are stuck in the same economy, the more competitive one does very well, has more money to invest in infrastructure and generally make them even more competitive, and the less competitive one struggles to keep its head above water, taking on more and more debt, becoming more and more uncompetitive, with higher and higher taxes providing less and less benefit to the population.
So, the more the economies diverge – and the more they diverge the faster they diverge. Any engineer knows what that means! Greece is heading for the exit – and short of writing off the Greek debt and agreeing to make regular payments of an equal magnitude to slow down the growth of the German economy and speed up Greece (and Spain, Portugal etc.) there is no way this exit can be stopped.