It has already failed, and is a dead currency walking:
…we’re in an interesting situation. The crisis is crippling the south, but the south has no power to resolve the crisis. The crisis isn’t comfortable for the north but still looks less painful than the solution. So the north, which has the ability to resolve the crisis, doesn’t have the will to do it and the south, which has the will, lacks the ability.
And meanwhile everything in Europe gets worse. As we’ve said before, with the exception of communism itself, the euro has been the biggest economic catastrophe to befall the continent (and the world) since the 1930s. Politicians in Europe thought they were living in a post-historical period in which mistakes didn’t really matter all that much. They were horribly wrong, and the wreck of the euro is blighting lives and embittering spirits on a truly staggering scale.
An “interesting” situation in the same sense as the ancient Chinese curse, “May you live in interesting times.”
The Euro isn’t crippling the south, socialism is.
No. What is crippling the South is forcing private bank liabilities into governments. The World Bank and ECB are using this crisis as an excuse to saddle governments with debt they shouldn’t be made to pay and use the south as yet another grand experiment in Chicago school economics. It worked so well in Africa, South America, Asia, and Russia. Remember the economy of Russia during Yeltsin with the radical economic liberalism policies and high unemployment and civil unrest? The same people are in charge of the situation again.
The solution is quite simple. Raise interest rates, lower VAT for the services sector, and say you simply won’t pay private debts with government social security money. Just like Iceland did.
PS: The ECB needs to have a charter to promote economic growth rather than only worrying about how to keep inflation low. The bank insolvency rules and deposit insurance should be at the Eurozone (i.e. Federal) level rather than at the national level since with the Eurozone rules money can easily flow between nations causing bubbles and bank runs in one place while it is being moved elsewhere.
The main culprit for the crisis IMO were the low interest rates in the Eurozone. It is little coincidence there were also historically abnormally low interest rates before the Great Depression as well. Low interest rates artificially inflate housing demand causing investment to flow from capital generating enterprises to real estate speculation and other non-wealth generating activities. I will give you an example of malinvestment. In Portugal the government canceled the construction of the TGV from Lisbon to Madrid and is funding the creation of high priced housing and golf courses for the rich in the middle of nowhere using government investment funds. The most likely event is the houses will be abandoned because the real estate market is at an all time low. Since the EU stopped providing funding for flattening the economic playing field (i.e. transportation and communications infrastructure) the construction business is now focused in this sort of crap. People in the government are interested in it because they can earn money with real estate speculation. They are buying agricultural land at low prices and selling it to a real estate proxy, which they also own, for a large profit. So even if they never sell a single house and the real estate proxy goes bankrupt they still have the money from the land sale stashed in a bank somewhere.
If the rules on credit were different this wouldn’t happen so frequently. This scheme is only made possible because of easily available bank loans.
The ECB needs to have a charter to promote economic growth rather than only worrying about how to keep inflation low.
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The main culprit for the crisis IMO were the low interest rates in the Eurozone.
Low interest rates are classic though naive economic growth tactics. What would the ECB have done differently?
The Euro is born of a socialist impulse.
Maybe more precisely, “fascism,” with the wrong people being bound together.
What’s gonna be hilarious is watching to see how far the socialists will go in wrecking things to prop the Euro up. Since ‘government’ in inherently good, then nothing government does can be called a failure or wrong, and the answer to a program that doesn’t work right is always More Government.