The fundamental flaw in the EMU is that it is not designed in a manner that allows each government to sufficiently protect its citizens in times of crisis. The allure of joining the euro was greater economic stability, price stability, potentially lower interest rates, cost savings and ultimately a higher standard of living for all involved. Unfortunately, the single currency system has been exposed as being a great boon to growth and a great disaster in fending off depression. A single currency system gives a government no ability to defend itself from outside threats.
Ceding monetary sovereignty gives you no ability to protect yourself from crisis. This is not to imply that a nation that acts irresponsibly should not suffer at all. But what use is a government that merely allows depression to be imposed on all of its citizens – even those who behaved prudently when others did not? Here in the USA we are firing teachers and firefighters because bankers speculated on real estate. Why should a child lose his/her teacher because of a mistake that a banker makes? From a societal perspective that should never be acceptable.
The problems in Europe are far worse. The periphery nations of Europe are now entirely dependent on the kindness of strangers. All they can do is cut spending which is self defeating in a debt deleveraging crisis. They all rely on the kindness of strangers to help them. They cannot utilize traditional policies to stabilize their economies. They cannot devalue their currency. They cannot even default unless they essentially receive permission from their “partners”.
This all raises an important question about the purpose of this “union” – what good is government if it does not protect those it is created for? Human beings are stronger in groups. 100 humans living in trees can fend of 10 lions living in the grass. Ultimately, the formation of government is an extension of this survival need. This is why we create government in the first place. As a unified force we are more powerful, safer, efficient and likely to survive than we are on our own. But without this unifying force we have to ask ourselves what purpose a government is serving?
Now, we can quibble over the level of intervention that govt should have in any society (and I tend to favor less), but I think we can all agree that the group should ultimately protect its own. In times of war or hardship I would expect any government to voraciously defend its own people. And if you cannot protect your own then what good is your government? This is the question Europeans ultimately have to be asking themselves today….Their governments do not exist to protect them.
This Irish “bailout” is not helping the people of Ireland. It is helping to protect the interests of foreign bankers. In the case of most Irish citizens it is in fact making matters worse. At some point the people of Ireland must ask themselves why they are involved in a currency system that is not truly unified. And perhaps more importantly they have to ask themselves why they allow their government to exist in its current form when it is incapable of helping them in the midst of crisis?