Morning Must-Read: Neil Irwin: How Underpaid German Workers Helped Cause Europe’s Debt Crisis

And David Leonhardt’s The Upshot is live: http://www.nytimes.com/upshot/

What first caught my eye:

Neil Irwin: How Underpaid German Workers Helped Cause Europe’s Debt Crisis: “People (especially Germans) often view the crisis…

…through this frame: Profligate, free-spending nations along Europe’s southern coast (we’re looking at you, Greece, Italy and Spain) borrowed more money than they could possibly repay; then, when the bill came due, they nearly caused the collapse of the common euro currency before being bailed out by their more responsible Northern European neighbors. That’s… incomplete. The run-up in debt in Spain and Greece and Italy was the flip side of Germany’s success in containing workers’ wages and improving exports. Germany sold more stuff to Southern Europe than it bought. It took the profits and, in effect, lent the money back to those same Southern European countries. In Greece and Italy, it showed up as government borrowing, and in Spain as a housing bubble fueled by bank loans. It all fell apart once the indebtedness of the Southern European countries became too much to bear. Because all these countries use the same currency, the euro, none could relieve the pressure by devaluing their currency as they might have with their own lira, drachma or peseta…. The approach so far has largely been one of forcing steep cuts in wages and benefits on the Southern European countries…. But there’s an easier way (or what should be an easier way). Middle-income German workers could be paid more…