The United States of Euro, Part II

You are familiar, dear reader, with our previous post on this subject but now it seems to have really come a cropper.

Let's review.

When a common currency for the European Union was promoted the idea was that it would simplify the problems of exchange rates-an impediment to the free flow of commerce in Europe where countries are packed in like so many herring in a barrel, to use a vaguely nautical metaphor.

Henceforth, there wouldn't be any more exchanging currencies, pesky drachmas to francs to marks to guilders-all at a price levied at every currency exchange window, mind you. And there would be no more being beholden to Uncle Sam and his hated dollar for a universal currency, either.

We would all proceed to the broad sunlit uplands of prosperity as only Europe, under the wise tutelage of the likes of Deutsche Bank, could do it, thus proving yet again the moral and financial indiscipline of the yanquis.

Some countries didn't swig the kool-aid, though. There's the British pound, the forint, the zloty, the Norwegian kroner and a number of others.

You see, the great disadvantage of a common European currency in the context of the European Union was that on the one hand it offered a stable currency, but it divorced currency from sovereignty. One way of dealing with your debts is to inflate your currency-print more money, in other words. And of course, under the benevolent hand of the Germans and to a lesser degree French bankers, that would never be necessary.

All of this seemed a mere flyspeck on the windshield of European progress in the halcyon days of national borrowing to support social program spending, all premised on the mortgage backed security payoff, property values appreciating 20 per cent per annum, world without end, amen.

Well. Unless you've just emerged from an extended vacation in Greenland sans a radio, you know what has happened, starting in 2006. Somebody's got to support the program, and when the minister intones "for better or for worse, in sickness and in health, as long as ye both shall live" you damned well had better pay attention. He's talking to YOU.

When you forego the ability to write down debt as a means of getting yourself through a bankruptcy, you're in a pickle that's as bad as somebody who's got student loans up the wazoo-something I'm familiar with.

And that's what swigging Euro kool-aid did.

Lately it seems that to a lot of people in the more prosperous parts of northern Europe the smell of decomposition hangs over the entire common currency project. They're grudgingly having to ante up the cash to the bail bondsman to get all those awful spendthrift brown people out of hock. You know, the Greeks, the Spaniards and Portuguese, the Italians and the Irish-although they ain't brown but they might as well be.

Where this is all leading is unknown. But it's an unfolding story, so stay tuned.