Nosemonkey's EUtopia

In search of a European identity

The Economist’s plan for fixing the EU

Much to agree with here – an important piece worth reading in full:

“Is the euro really worth saving? Even the single currency’s diehard backers now acknowledge that it was put together badly and run worse.”

But:

“the people who believe that countries would be better off without the euro gloss over the huge cost of getting there (see article). Even if this break-up were somehow executed flawlessly, banks and firms across the continent would topple because their domestic and foreign assets and liabilities would no longer match. A cascade of defaults and lawsuits would follow. Governments that run deficits would be forced to cut spending brutally or print cash.

“And that is the optimistic scenario.”

The solution?

“it is plainly a move towards federalism…

“we have reluctantly concluded that the nations in the euro zone must share their burdens. The logic is straightforward. The euro zone’s problem is not the debt’s size, but its fragmented structure. Taken as a whole, the stock of euro-zone public debt is 87% of GDP, compared with over 100% in America. Similarly, the banks are not too big for the continent as a whole, just for individual governments. To survive, Europe has to become more federal: the debate is how much more.”

3 Comments

  1. It is definitely worth reading in full. We can argue about the solutions proposed, but it’s break down of why the EU is a “debt crisis” even though it has less debt than the US/Japan (!) is simply spot on. Every Frenchman/German/Italian/other eurozoner should have a look.

    • I’m finding it particularly interesting that they’ve concluded that further integration is the key. Especially as they’re obviously so reluctant about it. It seems to be catching at the moment…

      If this becomes a widespread meme, it could become very interesting – reluctant integrationists arguing the case to the abolitionists will always be far more convincing than fervent europhiles doing the same,

      It’ll also, with any luck, highlight the almost certain disaster that a eurozone collapse would bring about, which might make people take this a bit more seriously than the gloating “I told you so” attitude of many on the anti-EU side to date.

      Want to see then end of the EU / euro? Fine – what’s your exit strategy, and how are you going to minimize the near-inevitable short-medium-term negative impact that such an abolition would entail ahead of your glorious EU- and euro-free future?

  2. I think that debt forgiveness is looking more and more possible and yet it is hardly discussed seriously in the media, I think it is worth exploring and I believe it offers real sollutions