Adam Tooze's recent article in Foreign Affairs makes the case that Germany's avoidance of domestic spending is undermining its future prospects, but there is also the problem that its external investments have been substantially into the Eurozone, into better protected (through currency union) jurisdictions. Those investments have in effect fuelled the boom economies in those peripheral countries - Ireland included, and perhaps especially Ireland - whose underlying infrastructure was too weak to sustain the debt, yet the infrastructure of the Euro managed to obfuscate. In essence, the Euro itself guaranteed the return, even if the collateral against which the loans were being made, or the fundamentals of the investment, were unsound.
As so many of these discussions do, much of the current situation is bound in politics, in ideas, and in a shared vision. Germany doesn't invest as much as it perhaps should in Germany, perhaps because it doesn't truly believe in the idea of Germany any more. The post-war investments were infrastructure, functional, necessary for basic existence, though at massive scale. The choices Germany has had to make about domestic investments in the past ten to fifteen years have been about a future Germany, about a country that is becoming less and less relevant to the sustainability of prosperity of Germans. This is not exclusively a German phenomenon; European integration is working, and working well. Workers move freely today, people move freely and often, and societies are integrating while interdependency has grown. Multiculturalism and its failure is a topic confined to non-European integration, not to Europeans themselves. It is a tribute the the EU (as noted by the award of the Nobel Peace Prize recently) that intra-European racism is not spoken of any more.
European capital flows have been poorly managed, and that has been the failure of the Euro. Integrated banking, and banking regulation, will help to preclude a re-occurrence; ultimately however it is continued socio-political integration that needs to happen. We need to think more as Europeans, with European problems, and European solutions, rather than Germany versus Greece, or core versus periphery countries, or a two speed Europe. Only solidarity will keep the project together; fragmentation even at the periphery will lead to a loss of confidence at the core, and ultimately to its dismantling. It would be difficult to see how the European Union could be dismantled effectively without some kind of conflict arising, and the more one contemplates the modalities of reversal, the more abhorrent it becomes. It simply cannot be allowed to happen.
Europe has failed in recent times to manage its economy successfully. But it has had extraordinary success in fighting war itself, and in asserting a vibrant, liberal, humanist vision of genuinely collaborative government. Europe is about cultural integration, about civilisation, about tolerance and about human rights. These are enormous achievements that can not be, and must not be forgotten. The real European economy is that of people, of family, of ambition, and expression. Let's not throw that away.