I previously made the case that the Eurozone and Germany need to part ways. Now it appears Germany is effectively doing that by setting up a separate monetary zone inside the Eurozone. Here is Ambrose Evans-Pritchard (my bold):
The authorities in Berlin and Frankfurt are worried that the ECB’s 1pc interest rates are too low for conditions in Germany, where unemployment has fallen to its lowest in 20 years. The ECB’s €1 trillion (£834bn) blitz of three-year loans to banks has started to reignite monetary growth in Germany, even though the key aggregates are still collapsing in southern Europe…
The German authorities are in effect preparing a form of quasi-monetary tightening to offset ECB largesse.
Is this the beginning of the end for the Eurozone?