September 28, 2011

Will the EU fracture?

British Chancellor of the Exchequer George Osborne gives Eurozone members "only a few weeks" to save the quasi-nation supernational entity. He was speaking narrowly about the euro as a common currency, but, in things like this, you can't take one step backward without other fallout.

In hindsight, early national opposition to the Maastricht Treaty that lead to the euro currency seems more than reasonable. But, promises from Brussels aside, it's clear that nobody back then thought about national fiscal issues that would crop up.

Given that Eurozone members today say they passed "the Articles of Confederation," and know what they mean when they say that, why wasn't anybody saying that 19-20 years ago? Or in the run-up between the passage of the treaty and the implementation of the Euro?

Don't tell me Eurozone leaders got incredible enlightenment in the past six weeks, or even six months.

While the new "old Europe" is good in many ways, it's now straddling two sawhorses. And, the "fixes" proposed so far won't cut it.

Greece, for example, doesn't need more bailout; it needs the other countries to take it over, at least until a true union is approved in Europe. And, until the EU admits that, it loses relevance.

That said, can the EU survive without the euro? Sure, it did pre-1992. Or, the current EU can get serious about debt rules and boot some current members. Or, to the degree I understand finance, the EU could be made a notional reserve currency while EU members go back to national currencies.

No comments: