53 The Steroid of Forex Leverage-How the PIIGS Propel the German Export Juggernaut Ian Wise Wagner College, New York, NY, USA Donald Crooks Wagner College, New York, NY, USA Edward Strafaci Wagner College, New York, NY, USA Cathyann Tully Wagner College, New York, NY, USA Abstract The formation of the Eurozone and adoption of the Euro as a unifying currency has gone a long way in solidifying the economic prowess of the post-world war II continent. The single currency has cut transactions costs and added fluidity to all forms of intra zone trading. The thrust of this research will focus on the impact that Portugal, Italy, Ireland, Greece and Spain (PIIGS) had upon the export strength of the German economy. The Swiss Franc is considered a surrogate for the DM therefore the authors examine how the Swiss Franc reacted once the Swiss government elected to break its linkage to the Euro. Keywords: Euro, Deutschemark, Germany, PIIGS, European Union, Foreign Exchange, Balance of Trade 1. Introduction President of Deutsche Bundesbank, Weidmann (2012) noted that macroeconomic imbalances were central to the Euro crisis. Greece runs persistent current account deficits while Germany runs persistent current account surpluses. Commenting on Weidman’s speech Bibow (2013) notes that rebalancing of trade balances is unlikely because it requires Germany to become less competitive since foreign exchange rate adjustments are not an available tool to countries within the Eurozone. Weeks (2012) argues that as much as three quarters of Germany’s recovery after the 2008 banking crisis was through export growth led by wage growth suppression. Dullien & Fritsche (2009) identified a disparity in growth and inflation between countries such as Ireland and Spain, which had experienced high growth and high inflation whereas Germany had experienced subpar growth and inflation. They also noted that these disparities were reflected in current account deficits in countries like Portugal Spain and Greece and current account surpluses in Germany. However, Huther (2013) warns that Germany’s high concentration on manufacturing, close relationships between industry and service sectors and focus on exports is not a model that can be replicated in countries such as the PIIGS. The literature does not specifically denote the direct economic benefits to Germany resulting from the PIIGS economic downturn. As such this research studies the value