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Are The EUs Days Numbered?

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  • Are The EUs Days Numbered?

    The continuing Greek financial troubles, the German-engineered bailout, and the Euro’s effects on world financial markets continues to be concern. This is a developing story and there’s no telling where it will lead, but here are some landmarks to look for.

    First, remember that the Euro is a currency without a government. The European Union has a governance system, but that’s not the same thing. Governments generally have their own currency and have the power to raise taxes and establish a budget. The European Union has no ability to raise taxes or control the spending of its members, and so has no real control over its currency. The Euro has been a sound currency as long as everyone’s economy has been growing. But a crisis has exposed the downside of this arrangement no ability to deal directly with the cause of the problem.

    Second, remember that the European Union is essentially a German invention. At its heart it is an organization of Germany and its important regional trading partners. Without a government to back up the Euro, that role falls to the Germans. The Euro, and in a broader sense the notion of a united Europe, will prevail as long as the Germans are willing to underwrite the venture, and not a day longer.

    Finally, it’s worth remembering that Greece despite what some folks want to tell you is not the United States. It has a higher debt burden tan the United States and no short-term prospect of any improvement. ...


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