EXCERPT:
"FRANKFURT—Greece and Europe's other intensive-care economies face a threat that can't be solved by cutting public spending or raising taxes: a loss of competitiveness.
And in the eyes of those struggling economies, the villain is Germany—the euro zone's largest economy—which has emerged in recent years as the region's most competitive. By raising the competitive bar, Germany makes it that much harder for its neighbors to compete to sell their goods and services at home and abroad, a factor that in turn affects their ability to grow out of their current debt-laden holes.
To be sure, German wages are high, but even higher productivity means it is relatively cheaper to hire workers and produce high-value manufactured products there, even compared with traditionally lower-cost Greece, Portugal or Spain....
There are three ways for countries to make their products attractive globally: rein in labor cost growth; improve productivity; and devalue currencies. The last option isn't available to the euro zone, which has a single currency that is, by most measures, still overvalued. The first two, though helpful over time, imply economic pain for years."
