Germany’s unemployment rate just hit its lowest level since reunification. Americans keep warning that the destruction of spending power in southern Europe is going to crush the German export engine, but apparently Germany’s been able to make it up with exports to fast-growing developing countries. Brazil, India, and China are just as good a market for new cars as Italy and Spain.
I don’t think we should wholly discount the possibility that Germany can keep this trend together even if huges swathes of the continent fall into a depression. Among other things, the current situation strongly encourages the most talented Italian, Portugese, Irish, Greek, and Spanish workers to move to Germany which would further boost the German economy. Obviously, there are always lots of good reasons to not leave your hometown and relocate to Munich, but that only drives home the fact that the people who do move are likely to be disproportionately high-motivation highly productive types who’ll reinforce Germany’s strength.