I don't have much to say about the ongoing crisis in Greece - Eurozone monetary policy is not my area of expertise.
It does bear to mention, though, that this highlights the dangers of giving up control of your money supply without getting any political clout in return. It also raises some pretty significant questions about the viability of the European Union, at least for smaller member countries.
Back in the heady days of aught-five, I started to have my doubts about the EU. At that time, Ireland was being held up as the conservative European model: low regulation, low wages, and low taxes was spurring a rage of economic growth. It was, as I recall, something of a favoured son for the new conservative movement.
Since then, things have gone badly off the rails. Ireland is a telling case study. They had a great policy in the boom times, but when the bust came, they had no way of responding to the sudden drop in global demand.
What Ireland's export-heavy economy could use is a fair to drastic devaluation of their currency, to help float demand and keep them above water. But the European Central Bank has no intention of devaluing the Euro - generally speaking, the ECB does what it's largest member states, like France and Germany, tell it to do.
It was a bit of a horse-before-the-cart problem: joining the Eurozone has always meant that the ECB takes control of your monetary policy, while the Union promises political unification at some undetermined point in the future.
That doesn't work. We tried something similar once (sans central banking) back in the days of the Second Continental Congress. What we ended up with was a loose confederation of states that didn't pay much heed to a central political authority.
At some point, the EU is going to have to press for more control over the economic behavior of it's member states. Either that, or countries like Greece and Ireland should start to question why they signed up for the union in the first place.
