Euro Zone Crisis
1. Decision Making
1.1 The concept of a “perfect” UNION
United Europe was at its birth and remains at its heart an economic idea. Its purpose was peace, but the means were economics. The purpose of the UE was to avoid another World War by binding together the nations, economically and financially so that is no longer in their self interest to go to war.
In 1957 the European Economic Community took birth. In 1979 was the first experiment with a currency union by linking European currencies which led to the European monetary system, the precursor of the euro.
Once the euro was established it seemed like the big steps to get those next levels of cohesion never actually …show more content…
As they were discussing solutions to the European debt crisis, they raised for the first time the idea what then became called private sector involvement. This is a euphemism for bond holder losses. Markets had always believed in one fundamental point, that a European country would not let one of its partners default. What it did do was to make a whole new host of investors in government bond markets scared of investing 1.3 Size matters
Speaking from the point of view of a monetary union, there must be taken into account that if political decisions are taken in one country, they will have an effect on the other countries as well in terms of economy. These being said, it is clear that national issues should be solved across all the currency area.
Even if Greece’s GDP in the euro zone represents just two percent, its sovereign debt crisis is destabilizing the economy all over the area. The problem should be solved through thorough political decisions in Athens, as well as in Brussels. The Greek government should change its economic program and as for the financing part, the European Council must deal with it.
EU’s decision making structure does not allow decisions to run smoothly, because the economic policies are not jointly made, since there are national interests to be considered.
The biggest mistake was they didn’t act quickly and decisively by putting money into the system. The Europeans did none of this. Europe’s