Ironically, a weaker euro is making Germany even stronger, accentuating Europe’s imbalances

…So why is Germany still insisting on such harsh austerity measures? Domestic politics plays a key role. “Germans perceive the current situation as one where they’ll have to shell out money to save [the eurozone] financially,” says Christian Breunig, an assistant professor of political science at the University of Toronto who did post-doctoral work in Cologne. “So in return, they’re trying to get as many political concessions as they can.” He adds, however, that Merkel has so far done a poor job of explaining to ordinary Germans why a bailout of Greece is probably in their long-term interest. “Germany should have come in harder and more committed early on. That would have restored confidence.” …