The Perilous Politics of the Euro

The jury is still out on whether Greece will manage to avoid default, remain in the eurozone, and reverse the brutal contraction of its economy. But any fair panel already would have issued a verdict on the political consequences of the common currency: utter failure.

SANTIAGO – The jury is still out on whether Greece will manage to avoid default, remain in the eurozone, and reverse the brutal contraction of its economy. But any fair panel already would have issued a verdict on the political consequences of the common currency: utter failure.

Of course, the case for the euro was always political and came in two varieties: earthy and lofty.

The earthy case, seldom made clearly in polite company, was that the countries in southern Europe spent too much, taxed too little, and thus borrowed in excess. So long as they could finance deficits by printing a local currency and devaluing it from time to time, they would stick to their free-spending ways. Only the straightjacket of the euro and a monetary policy governed from Frankfurt could discipline them.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/zlhGMpq;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.