Why the Euro will ultimately fail

For a decade until 2008-09, large majority of the economists weren't able to predict how this is going to bite. The southern states were having a ball as they carelessly kept increasing the labour charges and enjoyed a comparatively higher valuation at the cost of nations that have a more professional workforce. I get eerie whenever a country's mood and economy is suddenly booming for no seeming important reason other than the play on financial instruments.

Anyway, back to the point. Spain, Italy have a lot of fine craftsmen - remember Zara, Ferrari and Lamborghini! But the Northerners are pretty professional at their work - BMW, Volvo, Nokia! It will take long for the mindset in the southern states to change from casual to the one of performance.

As the pressure mounts, a lot of young people will start to gravitate towards greener pastures in other countries - it's easy for people from member states to move to a new country, thus depriving these countries of young workers. It'll turn out to be a pretty painful situation them, a brain/workforce drain, which is the last thing they want right now.

The EU and Euro currency brings both good and bad. The good that I see is the easy exchange of money, travel and work options. The bad is that European people aren't a single stock, they don't like to be compared to each other, or to be put on similar benchmarks. It was smart move by Switzerland and UK to stay out of the Euro currency. The common currency puts a pressure on everyone to be equal. And that, is not going to happen. This will be a challenge EU will face for a very long time to come, and maybe there's no good answer.

Well if the whole thing is a union, what does it matter? Americans don't stress about the smartest Floridians heading to New York for work.

And there's the problem... you're either a union or you're not. Can't pick and choose which elements of union and sovereignty you want.

Pretty spot on. And the "2-speed" union has been in the talks quite a few times in the past decade. I don't think we need more nationalism at the European level to strengthen the public opinion of the need for further integration.

It just seems that the news outlet have not moved out of the national border and are indirectly responsible for this feeling of being a national from the country before being European. That being said, a lot of people in the younger generation seems to feel European t least on an equal part with the feeling of being a national citizen from their country.

However the European monetary union isn't a union like you see in the US or other huge countries. In the US we have probably 100-200 billion a year in transfer payments. Automatic stabilizers like social security and unemployment insurance, etc. And then we have a true central banking system Bank in Florida goes under, it's not Florida's problem it's the Federal Reserves problem.

If a state isn't able to use currency exchange rates to control in flow and out flow of money then you need these types of things to keep the system stable. Europe doesn't.

So you are indeed right about not being able to pick and choose. You can't take control of a counties currency away from them without guaranteeing that the central bank and government will have their back economically.

The author makes variation in competitiveness out to be a bigger problem than it actually is. Even if one nation is always less competitive than the other (and I am not sure that Spain and Germany would be a good example here), this doesn't have to end up in a situation where one nation can produce a product for less and less and the other nation stagnates indefinitely.

> It’s pretty obvious that Merkel, or maybe her voters, aren’t European enough to accept the fact that Greece will never be able to repay it’s debt, no matter how much they cut their spending.

Most German voters are very capable of accepting this. They think reforms are necessary to prevent the problem from reoccurring, but they don't oppose a haircut per se.

> Far-outish-upon-Grandalf with 1000 inhabitants and a closed factory in the North of England just isn’t a good business for England. But the government still pays for social services, public pensions, roads and schools because the British voters accept that even though far-outish-upon-Grandalf is pretty screwed up, they are after all British and you can’t just throw the poor bastards out of the Commonwealth.

> Carolina is a piss-poor state that needs handouts from the federal government year after year. Last year South Carolina spent $2.34 for every $1 they collected in taxes. Courtesy of the federal government.

EU nations aren't like states in the US. It will be great if some time they become states in a union, but that time is not now. While they're still independent, though, each nation remains able to plan their budget and expenses independently. Sure, there is not much freedom to adjust the currency -- but each nation still has plenty of other tools available to make sure the deficit remains controllable.

I disagree with the notion that the Euro has to fail just because EU nations are not all the exactly the same. I see this crisis as a point where people finally start paying attention to their neighbors in the fiscal union around the Euro, and that should make future crises much less likely and should make the EU more resilient as a whole.