Political leaders and eurocrats have recently been celebrating the end of the euro crisis. They are of course lying. There is only a temporary lull before the next acute stage of the crisis sets in. If you do not believe me, read what the FT's columnist Gideon Rachman writes:
But there is also a different, darker interpretation that I find more convincing. This holds that the economic crisis has gravely damaged the euro. It has stripped the project of support and legitimacy and exposed the design flaws in the single currency. The biggest flaw remains the lack of a large central budget and a transfer union of the sort that makes other federal currencies, such as the dollar, work.
That weakness can only be remedied by the creation of something much closer to a European state. But the crisis has profoundly undermined the pro-European sentiment that would be necessary to build a United States of Europe. Even in Germany, which has historically supported the European ideal, the country’s most respected institutions are crying foul.
As a result, the euro is stuck with a floundering economy, inadequate institutions and weak support. That does not sound like a long-term recipe for success to me.
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