News today suggests that the central European economies are beginning to surge ahead with growth while at the same time the periphery continues to struggle terribly.
In today’s US print edition of the Wall Street Journal there is news that German GDP in December continues to grow. We only just read that house prices are surging too. As Germany starts to surge ahead, it will need to push interest rates up to help control growth and prevent overheating.
See German Economy Accelerated Last Year and Eurozone Output Data Suggests Strong Upturn.
But Greece, Spain, and even Italy, really don’t want and may not even be able to sustain an increase in interest rates. The Greek economy has not yet recovered. It needs persistent low rates and in fact additional help (or changes in policy) to help repair the damage.
As such the pressure-cooker-politics of the Euro is about to get a dose of heat. It won’t be another six months before the pressure becomes clear to all.