Confused about Europe. A must read is Paul Krugman's piece from last year.

[snagglepuss]

which not only concisely explains what has happened in Europe but also why such a crisis wouldn't happen on this side of the pond, a fact which hasn't stopped Repukes from trying to scare people about govt spending.


The Real Reason for the Euro Mess

snip


... I've been troubled by reporting that focuses almost exclusively on European debts and deficits, conveying the impression that it's all about government profligacy and feeding into the narrative of our own deficit hawks, who want to slash spending even in the face of mass unemployment, and hold Greece up as an object lesson of what will happen if we don't.

For the truth is that lack of fiscal discipline isn't the whole, or even the main, source of Europe's troubles not even in Greece, whose government was indeed irresponsible (and hid its irresponsibility with creative accounting).

No, the real story behind the euromess lies not in the profligacy of politicians but in the arrogance of elites specifically, the policy elites who pushed Europe into adopting a single currency well before the continent was ready for such an experiment.


snip


Now what? A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley's Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger "the mother of all financial crises". So the only way out is forward: to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states.


© 2010 New York Times News Service










http://www.guardian.co.uk/commentisfree/cifamerica/2010/feb/15/greece-europe-single-currency