Germany has long had the distinction of being the largest, strongest and most stable economy in the eurozone. Not only is it the largest economy in the eurozone based on nominal GDP, but it is the fourth largest in the world. With the exception of France (which could be seeing big problems of its own), no other country comes close to its size and more importantly, the stability. Germany truly is a superstar country on what has become a bad team.

SEE: 4 Misconceptions About The Eurozone Crisis

According to the European Commission, 17 countries have adopted the euro as their currency. France uses it but the next two largest economies using the euro are Italy and Spain, respectively. Italy has the eighth-largest economy in the eurozone and Spain is somewhere between 12th and 13th. Both of these countries have adopted austerity measures in order to avoid a fate similar to that of Greece, though both economies are starting to resemble the eurozone's worst.

This presents a problem for Germany. Being the star quarterback on a losing team may cast you as the pillar of stability but after a while, you begin to grow tired of giving more than you get. Holding up the team becomes a load that is increasingly harder and harder to shoulder. You find yourself sacrificing in order to paint a picture that is a lot rosier than the reality.

Germany is becoming increasingly tired of backstopping every other euro-denominated country at the expense of its own economy. As a result, economists all over the world are asking if exiting the euro would be the best move for all concerned.

The Gatestone Institute reports that as long as Germany is part of the euro, it will spend 60 billion euros ($78 billion) or about 3% of the country's GDP in costs associated with the currency. In addition, the fact that the weaknesses of countries such as Greece, Italy and Spain have a negative effect when averaged in with Germany's strength makes the euro undervalued in the eyes of Germany. According to CNN, because of the undervaluation of the euro relative to the overachieving Germany, the country has accumulated large-scale trade surpluses.

Moreover, while many speak of Germany being an economic powerhouse, it has problems of its own. Germany's debt level is about 82% of its GDP, but after accounting for its liabilities to other European institutions, the level soars above 100%. Angela Merkel, the German Chancellor, stated recently that Germany's ability to prop up the euro is not infinite, hinting perhaps that the billions it pours into periphery countries, such as Spain and Ireland, must end.

Should Germany Secede?
Though drastic and almost inconceivable to many, some experts believe that if it would return to the Deutsche mark, not only would Germany benefit, but struggling countries may as well.

Although it would take at least 200 billion euros ($261 billion) to exit the euro, recouping that one-time cost would begin by the fourth year it is not paying 60 billion euros ($78 billion) each year. Although the country may enter a recession as a part of the exit, some believe that Germany could enact measures to prop up the economy while it adjusts to the higher value of the mark.

In addition, countries under financial pressure could benefit too. It would certainly be a shock to the global economy and without Germany, the value of the euro would instantly fall. The fall would likely be drastic but a devaluation of the currency would help increase weaker nations' trade competitiveness, according to Bloomberg.

Further, it would give some breathing room to southern European nations struggling to service their debt obligations. It would not remove the burden, but according to the New York Times, it would give them the ability to restructure their economies and collect more taxes, potentially making the countries more attractive to investors.

The Bottom Line
The chances of Germany leaving the euro are remote. With the eurozone relatively quiet at the end of 2012, talk of drastic measures has left the mainstream media for now. That does not mean that the issues of the eurozone have passed. Before the euro finds solid footing, other countries will have to find a way to make Germany a member of the team rather than the star player.

Related Articles
  1. Economics

    These Will Be the World's Top Economies in 2020

    Discover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
  2. Chart Advisor

    4 European Stocks to Consider Buying

    European companies, listed on US exchanges, that are providing buying opportunities right now.
  3. Economics

    The 4 Countries That Produce the Most Chocolate

    Discover the four countries in the world that manufacture the largest amount of chocolate and learn basic facts about the chocolate industry.
  4. Entrepreneurship

    Top 3 Most Successful German Entrepreneurs

    Discover three of Germany's most successful entrepreneurs, their respective entrepreneurial fields and the contributions they made to society.
  5. Investing News

    Germany Tech Startups: Keep Them On Your Radar

    Many German companies, which are eager to catch up with the rest of the world by entering the digital age, are investing in tech startups.
  6. Economics

    The 5 Countries That Produce the Most Solar Energy

    Discover which countries are taking advantage of solar power and how they are implementing systems to use solar as a viable source of energy.
  7. Investing News

    Monday Intel: Markets Struggle With China and VW

    More troubling news came out of European car makers over the weekend: German car makers BMW and Audi also reported that their cars may also be affected by the same software that evaded emissions ...
  8. Mutual Funds & ETFs

    An Investor's Guide to the European Economy

    Below is a brief overview of the countries which make up the Eurozone and how their economy and markets have been performing in order to put things in perspective for an investor.
  9. Investing News

    3 Things Investors Should Heed from Puerto Rico

    The Puerto Rican debt crisis matters more than you think. Here's how it could impact you.
  10. Investing News

    Tax Evasion Plagues Greece

    Contrary to what some may think, Greece’s debt problems are not due to extravagant spending by the government, but to insufficient revenues caused by rampant tax evasion estimated at 20 billion ...
  1. In what ways does Bayesian probability support the probability default model when ...

    During the European debt crisis, several countries in the Eurozone were faced with high structural deficits, a slowing economy ... Read Full Answer >>
  2. How do wholly owned subsidiaries operate in the European Union?

    Regulatory authorities in the European Union (EU) are suspicious of wholly owned subsidiaries, or at least their relationship ... Read Full Answer >>
  3. What developed countries have the greatest exposure to the automotive sector?

    The developed countries with the greatest exposure to the automotive sector are Japan and Germany. This is based on exposure ... Read Full Answer >>
  4. What are the most common market indicators to follow the European stock market and ...

    Market indicators can be used by technical analysts to measure the movements of major exchanges or indexes. Almost all market ... Read Full Answer >>
  5. What countries represent the largest portion of the global banking sector?

    China, the United Kingdom, France and the United States represent the largest portions of the global banking sector. China's ... Read Full Answer >>
  6. Which country has the most gold?

    Acquiring gold for a nation is a costly expense, but in times of economic trouble, countries want more gold in their reserves. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  3. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  4. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  5. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  6. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!