Italy’s teetering banks will be Europe’s next crisis

Then why did you say 'western'?

> Instead, they opt to leave their countries in search of better pay, mainly because they can, and are educated enough.

The brain drain is very real. Guess where everyone (particularly scientists, and musicians) is going? To Germany.

  It might actually be cheaper for the taxpayer to just
  save the bank.

So, there are a few theories about why the financial crash happened:

Theory 1: The [banking system / market / bankers paid seven-figure salaries] actually had little to no understanding of what they were doing. Complicated derivative products and credit default swaps were mispriced because nobody really understands the maths and their risk models are all wrong.

This suggests, if we want to prevent the problem from recurring, the legislative intervention should be to either ban complex financial products or require much higher capital reserves for banks gambling on them.

Theory 2: The [banking system / market / bankers paid seven-figure salaries] had accurate models and understood the risks. They just decided they could go to the roulette table and put a trillion dollars on red, and the government would bail them out if the ball landed on black.

This suggests, if we want to prevent the problem from recurring, the legislative intervention should be to make bailouts radically less attractive for the people who benefit from such gambling. This could mean not providing bailouts, so banks that gamble and lose go bankrupt; or could involve some of the many other disincentives legislators have at their disposal.

If you follow this theory, and you adopt the policy that there will be no bailouts, you have to let the bank fail to prove to people that you really mean it.

well therein lies the problem. they knew they could never sell that to the public so they created a union which explicitly allowed member nations a great deal of autonomy. Part of the BRexit and possible exits of the French and Dutch is because the politicians in Brussels are trying to end run that agreement and impose it.

America had one super super advantage, it started out by rebelling against one nation and winning. Then the second advantage Europe never had made it easier to stick together, it has a common language. It also does not have hundreds of years of brutal wars between member states that Europe has experienced and experienced within just a few generations.

So unless they really can convince countries to cede the majority of their sovereignty and go to the routes of states in the US there will always be strife and situations like this.

I will say, the current restrictions and such they do have run contrary to allowing for any individual nation getting out of trouble without a lot help

No, I'm saying that the current governing structure of the EU is a hack to get around constitutional restrictions.

Everything the EU does can be done without these hacks (one alternative would be to negotiate acceptance of the directive as individual treaties), but the governing structure streamlines what would otherwise cause a whole lot more bureaucratic hassle by having created a legislative process which isn't really a legislative process, except that the member states have committed to taking the output (the Directives) and implementing them into law. This ensures that no legal delegation of sovereignty needs to be done, because national parliaments can choose to say no. There would be consequences, but they have the right to.

It also, despite the many flaws in how it is done, delegates some of this decision-making authority to the EU Parliament, something which is only possible because they're involved in deciding on Directives, not laws, because there is no legal basis for them to legislate. Even so, this involvement is limited because there is also no legal basis for Parliament to exercise the executive powers of the member states that is used by to actually bind the member states under the relevant treaties.

I don't think anyone (other than lawyers making money advising on it, perhaps) actually likes the current system. But it sort-of works, and the poblem with trying to reform it is that people dislike it for diametrically opposing reasons: Some wants a federation, some wants powers pulled back. So it's one of those compromise that makes everyone equally miserable.