With German Chancelloress Dr Angela Merkel likely to lose the parliamentary vote for yet another bailout of the European Union’s PIIGS (Portugal, Ireland, Italy, Greece, Spain), and the German constitutional court ruling against the steady stream of funds, as demanded by the EU’s Brussels bureaucrats, the EU-idealists are scratching their heads, wondering how this could happen … less than 10 years after the Euro became a common currency.
On the other hand, there are many observers who criticed the monetary union from the outset, observing that fundamentally-different economies sharing a common currency do not make for a stable economy for any of the countries sharing the currency. Children at school may note that they get different pocket money than others. Of course they all want “the same”, when “the same” is the biggest amount.
In the real world, the pocket money, when forced to be the same for all, ends up being less than the least previously gifted. There are administrative overheads, after all! 😉
Overnight collapse of the whole EU is unlikely. There are some inherently-strong economies, even some that aren’t as cashed-up as Germany, in the EU and the Eurozone.
The normal thing that would be expected to happen is that Eurozone countries with disparate economies re-invent their own currencies. And allow that currency to float, adapting to the rythm and forces of their independent economy without being dragged down or struggling to keep up with other countries sharing a common currency.
But normal things no longer happen often in the EU.
The harder the EU struggles against economic entropy, the more quickly it exhausts its reserves to adapt the Union in a post-Euro scenario. It’s not their own money that the Eurocrats are wasting on the Sisyphean pursuit; it’s all from the taxpayers of the EU, diverted from tedious pursuits such as pensions, road building, health funding, education, scientific research, etc.
Post-Euro, with all the funds gone, nothing can remain of an EU; probably not even a free trade zone with minimum, interior border controls. And that has the potential to be more damaging to economies recovering from a currency crash, than the crash of the currency. The instinctive impulse for countries to protect themselves with import restrictions and penalties must be recognized — and kept at bay.