Why The Euro Can't Work

In recent posts, I've been more than a bit pessimistic about the Euro. So is Mario Draghi, president of the European Central Bank, and for much the same reason.

Today, Atlantic shows some of those reasons in a really humorous graph.  Whether you believe the Euro is doomed as the article says, depends on whether the Eurozone can create a fiscal union as well as a currency union. I believe that was Mario Draghi's message yesterday.

One paragraph from the Atlantic article really caught my attention:

"If you find yourself wondering, as I did, how the 50 states within the U.S. would compare across this measure of dispersion [within the Eurozone], remember that the nice thing about the United States is that baked into the first word of our name is not only a monetary union (i.e.: we all use dollars) but also a fiscal union. If Mississippi has a bad year (or decade, or century), Washington doesn't debate whether we should force the state to raise taxes or cut spending to become more competitive. We just keep paying it Medicaid, which is basically a transfer from rich Americans to poor Americans, many of whom live in Mississippi."

I would only point out that in our past history prior to the New Deal, the transfer (as during the Whiskey Rebellion) was more frequently from poor Americans and poor regions to rich Americans living in wealthy regions. Those are the thrilling days of yesteryear to which our top .1% want us to return.