On the Euro Crisis

So much pain!

There has been a whole mess of talk about the Euro and its viability in the wake of several debt crises in the Eurozone.  In short, several countries who are part of the European Union, namely Greece and Italy, have suffered under the pressure to keep up with the currency.  Under the euro, nations like these have struggled to thrive under increasing debt, and as a result businesses and economies have suffered.  Italy just recently passed a set of austerity measures in hopes of maintaining economic stability in the future.  This is a brief description of the events surrounding the euro debate.  CNN has a more detailed summary of the crisis, which you can read here.

Firstly, let me point out that I really don't understand economics.  Once during my economics class last year, I approached the professor with a question about... capital or demand or GDP or something economicy like that.  He proceeded to explain the concept.  I didn't understand, so he tried explaining it another way that I also did not understand... and another way, and another way,... and yet another.  Finally, he put down his pencil and mumbled, "Well, you don't need to answer every question correctly on the test in order to pass."

What I do understand is cause and effect, and I'm pretty good at reading cultural and social phenomena, both of which are influenced by economics.  So, I will focus on shedding light on those things, as well as offering some thoughts into how people are debating them.

As I've mentioned before, the Europeans are good at debating, and even in the wake of some very real problems and threats, they manage to stay relatively calm.  I'm afraid I can't say this about the media in the United States.  Though, like I said, there are many potentially destructive consequences to this crisis, many American news emissions, like this one which is also from CNN, seem to revel in the unfortunate nature of the events.  I've read other American articles that could easily be headlined as "Watch Europe Burn!"   

But let us not dwell too long on the American entertainment--err, I mean news-- networks' portrayal of the situation.  The primary concern is that European Union will be fractured into what the French newspapers are calling a "Europe a deux vitesses" or "two-speed Europe."  This entails a couple of different outcomes.  It could mean that the struggling nations leave the European Union, or it could mean that they stay in the European Union but revert back to their prior currencies.  In either case, it would cause a divide in the Eurozone wherein the wealthier nations continue to be wealthy and build their economies with a more powerful currency while the others fall even farther behind.  Hence the "two-speed" distinction. 

I'm guessing that this probably won't happen.  Europe's leaders have tried so hard to maintain economic unity that to suddenly go back on it would make everything worse, as detailed in this article here (it's in French, but if you have Google Chrome then the browser with translate it for you).  I think that this is further evidenced with Italy's recent austerity bill; governments do not want the European Union to fail.  To further stave off more problems, some have even proposed bail outs from Germany and France, the two most wealthy Eurozone nations.

Yet, the most interesting reaction by far is the push for greater federalization of economic policies.  Some thinkers, like this guy (again, in French), think that this the perfect opportunity to further integrate European nations into one economic entity.  This would give more power to European Commission to dictate economic policy and reduce the power of individual nation states to act outside of the Union's economic interest.   The logic here is that in order for the Union to work, there needs to be more uniformity and enforcement of the Union's policies, as opposed to now wherein some member nations go well above the maximum debt amount and get away with it.  Several high ranking officials have already expressed support for this idea

I curious to see how this will play out.  With the desire to maintain unity, it's not unrealistic to think that European economic policy could become truly federalized, that there would in fact be one economy for the European Union.  From what I've read, this would be maintained by the European Central Bank, though I'm still hazy on the details of how that would work.

I imagine that I could offer more insight if I was knowledgeable in economics, and it's sometimes difficult to follow these events in France where everything is hunky dory, at least relatively.  As always, if you find something inaccurate or lacking in the post, please let me know.  I like being informed.

I enjoy learning about history, and I'll admit that I do have a habit of dwelling on the past.  Still, it's never been in my nature to be nostalgic.  I think that it's an interesting time to be alive because I believe the world is in the middle of transitioning from one state of affairs to another.  Like when national sovereignty replaced feudalism, the nation-state is giving way to a new socioeconomic and political entity.  Perhaps this will take the form of federalized nation groups, or perhaps it will be something else.  In any case, I suppose it's too early to speculate, but I'm glad to be part of the conversation.