The Spreading Crisis

…Why is the crisis spreading? And why has it shifted to Spain, after all, up until 2007, the Spanish government’s balance sheet looked better than Germany’s.  They had lower public debt, had never broken the EZ’s deficit rules, and had consistently ran budget surpluses.

So why Spain?
 
The problem isn’t Spain. Nor is it Ireland, Greece, Portugal or Italy. It’s the monetary union itself.

The EZ’s creators were warned that a monetary union outside a fiscal and political union would not work, but they proceeded anyway. Now they’re trying to correct their error by inflicting pain on the members, (internal devaluation) because the only other choice they have is to create a United States of Europe, which would require public referenda in all 17 countries.  They know that their chances of success in that effort would be quite small, so they’re not even going to even try, which why the band-aid remedies will continue until one member leaves and the race for the exits begins.

http://www.counterpunch.org/2012/06/19/the-spreading-crisis/

Related:

…”What does Europe look like if we get through this and solve this crisis?” he asked rhetorically. “It looks a lot more like a federation,” he argued, calling banking union and basic social services a part of that plan. That said, “there isn’t the slightest chance of getting to that federal union on the current path,” he added…

http://www.businessinsider.com/martin-wolf-federal-union-europe-doomed-2012-6#ixzz1yVtZSjll

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