The goal of consolidating Europe into one state goes back in modern times to Napoleon Bonaparte’s Continental System whose goal was to create a system of Empire that was self-sufficient and would preserve within it its industrial capacity against the exports of Britain.
The Euro is a new effort led by Germany to achieve a new Continental System. It was Germany that pressed the Euroland nations to extend the Nato Alliance to Poland to protect its industrial investment in eastern Europe in direct violation of the agreements with Yeltsin.
Germany’s foremost goal was to create this 16 trillion Euro common market and Euro currency as a direct competitor of the United States where it would finally have a similar market to scale its products. It is for this reason we do not see Germany giving up on this dream just because a Portugal at 1.4% of Euroland in GDP, or Greece at 1.8% are having problems. These problems benefit Germany though it cries with crocodile tears of distress over the thought of subsidizing the weaker nations while its exports soar as the Euro falls. These German export profits more than offset some lending to the states as Greece and Portugal that are in IMF tribulation, and these exports act, indeed, as a self-correcting mechanism for the Euro as the trade surplus generated by Germany will act to counter the Euro’s fall.
If there are any problems here it is between the bank exposure of the main Euro nations in lending to the banks of Portugal and Greece, and they would be concerned with triggering another derivative crisis that happened when Lehman went down. The pulling of the plug at Lehman detonated parts of the quadrillion derivatives which represent 17.5 times the world GDP of 65 trillion. The currency component of this derivative structure is 58 trillion alone, or nearly the GDP of the entire world.