Is Angela Merkel seriously considering a Greek exit from the euro?
Der Spiegel newspaper explored that scenario on Sunday.
On Monday, the euro fell to a nearly nine-year low against the dollar, amid concern that a left-wing government might win elections in Greece and cancel a big part of its debt.
But the mood is not all doom and gloom.
Fidel Peter Helmer, Head trader of Hauck & Aufhaüser private bank, said: “Exporting countries are definitely happy about the low euro because their goods become cheaper for foreign buyers.”
Exports drive Germany’s economy, the foremost in the EU, representing 46 percent of German GDP in 2013.
Roughly 57 percent of its exports are within the bloc however, so it wants an economically healthy union.
Germany will look to its Asian and American buyers to offset economic lethargy in the eurozone, and yet falling global oil prices — which of course benefit German producers — could morph into falling demand for exports.
Meanwhile though, German household consumers needing to spend less at the petrol pump are feeling freer to put their money elsewhere, stoking optimism among economists.
Jörg Krämer, chief economist at Commerzbank AG, said: “The combination of a weak euro and a lower oil price stimulates the economy considerably. This is for us an important reason to expect that the German economy should unclench from last summer’s stagnation. Growth should increase slowly now.”
But there is also falling inflation to consider.
It was just 0.1 percent in Germany in December — measured year-on-year.
The lower it goes, the more dangerous it is for corporate profits.
An official estimate for the eurozone is imminent, and analysts are not ruling out the possibility of close to zero.
This piles pressure on the European Central Bank to act — wary of the harm if consumers held off buying because they expect prices to fall further.
It raises the expectation that the ECB will soon resort to the stimulus of unconventional debt-buying.
But the German government holds at least 65 billion euros of Greek debt, and it doesn’t want that frittered away.
The government in Berlin is saying little about the speculation round Greece remaining in the euro.
The same in Athens.
Both are leaving Greek voters to ponder the possible storm that an electoral victory of the left might bring.