SEARCH BLOG: EUROPE
Unlike the U.S., Europe's currency... the Euro... is based on the voluntary cooperation of 17 sovereign nations that are trying to be a United States without a central government. The problem is that each of the 17 nations plays by their own rules and each nation has a disparate impact on the common currency. Britain's prime minister is essentially saying to the 17 nations that if they want a central currency, they need a central government... they need to be a United States of Europe.
The United Kingdom is not a member of the group of nations using the Euro, but most of its trade is with the Eurozone nations. If those countries' currency starts to disintegrate, Britain's trade will be severely impacted... and Britain is now into another recession which can scarcely handle that.
Greece is the source of most of the consternation. As written in The Wall Street Journal:
Countries have defaulted, devalued, or even withdrawn from a broader monetary union in the past. But none has done it all at once—and certainly not an economy so deeply integrated into global financial markets. ...
The consequences of an exit from the euro for Greece and the rest of Europe would likely be so tumultuous that policy makers have been reluctant even to speculate on how it could work.This all stems from some of the Euro nations living well beyond their means and not being willing to face the financial consequences... Greece being the ultimate example.
Greece's main center-right party has failed to form a coalition government Monday, adding yet more uncertainty to the debt-ridden country's political situation.
New Democracy leader Antonis Samaras said he did "everything possible" to form a coalition, but that none of the parties agreed to join with his party, which won first crack at forming a government after finishing first in Sunday's parliamentary elections.
It will now be up to the leftist Syriza coalition, which opposes unpopular austerity measures imposed to secure a European bailout, to form a government.Greece, like France, is comfortable taking a bailout and increasing spending as long as it does not have to meet the bailout requirements. There is apparently a European school of economics that says when you are broke, spend more.
Or is that an American school of economics? No, there couldn't be any U.S. states that are run that way.