Bernard Connolly, a long and persistent critic of Europe, estimates that it would cost Germany, as the main surplus country in the euro area, about seven percent of its gross domestic product per year to transfer sufficient funds to bail out the deficit countries, including France.
That amount, he has argued, would far surpass the $400 billion World War I reparations bill forced upon Germany by the victorious western powers — the last payment of which Germany made just last year.
The article is here. I would not regard that as a very exact estimate, the point is that the correct estimate (which in any case still depends on choices to come) is not small. The consistently insightful Wolfgang Münchau (FT) tells us tonight that the Eurozone has ten days at most. Scott Sumner has a very good post on related matters. I still believe that “Germany isn’t just bluffing,” of course we’ll see soon enough. (This is not the NBA!) Best prediction is a “too little, too late lame partial eurobond” which won’t change anything. Welcome to the age of the perpetual financial crisis.
If I were “the eurozone” I would really, really, really want to have something ready before trading starts Monday morning. They don’t.