The European Union — Too Good to be True?

On August 17, the London Times wrote:

“German politicians have argued that countries that cannot pay their debts should be expelled from the euro – but why not turn this around and expel Germany? Given its lack of solidarity with other Eurozone countries, Germany could be politely asked to leave. Or the decision could be triggered by a political revolt or court decision within Germany if the other euro members override its objections and force the ECB to buy vast amounts of Italian and Spanish debt. Germany would then issue a new mark and other countries would have a simple choice: follow Germany out of the euro or continue in a smaller French-led group, similar to the Latin Currency Union.”

On August 28, Thomas L. Friedman wrote in his column in The New York Times:

“…It was a nice idea, this European Union and eurozone: let’s have a monetary union and a common currency but let everyone run their own fiscal policy, as long as they swear to work and save like Germans. Alas, it was too good to be true….”

4 Responses to The European Union — Too Good to be True?

  1. It’s interesting that as long ago as 1807, in a letter to his brother Louis, dated November 16, Napoleon I wrote: “I want the whole of Europe to have one currency; it will make trading much easier.”

  2. Let us not forget how tribal Greece, Italy, Spain are: there is little real federal presence in the central financial sense. By issuing bonds to the ECB, the PIIGS are giving up mastery of their own houses. The bigger question is “Does the EU have the will to enforce an acceptable sense of discipline?”

  3. Does anybody know whether there are any obligations within the European Union to collect equivalent taxes? The Germans and Austrian collect taxes while countries like Greece have a large cash economy.

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