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Europe’s Trojan Horse

The Greek crisis shows that the EU is still only halfway toward creating a viable monetary union. Unless it creates a proper emergency financing mechanism – and pushes for political integration required to make such a mechanism feasible – the next crisis will make this one look like a walk in the park.

BERKELEY Europe is now moving ineluctably toward a bailout for Greece. There will be emergency financing. There will be conditions. There will be the obligatory promises by the government in Athens.

This will make it possible for the Greek government to service its debt. The markets will settle down. The longer-term consequences will not be savory, but they will be problems for another day.

Some will say that the fatal mistake was allowing Greece to adopt the euro in the first place. That the country was unprepared should have been clear. Its fiscal policies were already out of control when it joined the monetary union in 2001, and its trade unions were agitating to push wages up to European levels, despite lagging productivity.

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