My wife and I were living in Europe a decade ago when the Euro was introduced. Travel within the Eurozone was much more convenient with a single currency instead of having to convert after crossing every border. But I wondered how the inevitable differences in rates of economic growth would be accommodated.
The answer is now clear: not.
From the outset, some economists warned that the system wouldn't work. Here is an account of how Europe's political leaders ignored the warnings and chose to listen to economists who were more optimistic about the Euro.
The fall of the Euro still seems likely to begin in Greece. Greece's May 6 elections resolved nothing. It has proven impossible to form a government, so new elections will be held next month in hopes a government can be formed this time.
Will Greece default on its debts? It seems likely. Will Greece then leave the Euro zone and return to the drachma? It's really hard to see another realistic possibility.
Will such an event force the European Central Bank and, especially Germany, to rethink its policies of austerity?
Stay tuned.
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