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Euro Disunification

In America, our regional differences are surprisingly enduring, given our labor mobility. But, let's face it, our differences are cute and quaint and, in the end, not very important. A Californian can make himself into a Texan just fine. In the end, we're all Americans. There are plenty of Yankees in the South and lots of Southerners in the West and Westerners are heading back East. It's a mixed-up, muddled-up, shook-up country -- but it works.

But a Greek can't become a German can't become and Irishman can't become a Spaniard can't become a Finn. There's no such thing as "a European." Regional differences matter in Europe, in ways they never mattered here, not even during the Civil War.

All it would take to sink the euro, I figured, was a recession nasty enough to make a unified monetary policy unworkable. At that point, the EU would remain, but individual national currencies would return. And without too much fuss, I'd hoped.

For real-world examples, look at the countries that tried adopting the US dollar as their own. I can think of Panama and Argentina off the top of my head; there might have been others. Both experiments ended badly. Eventually, they entered recessions, and neither country could control its own monetary policy. Nor could they borrow cheaply enough or spend with any discretion. Panama and Argentina were shackled to our policies and their ability to earn and keep our dollars -- while we were booming and they were sinking. Thus ended their experiments in a single currency.

So, I imagined, would the European experiment with a single currency.

What I didn't imagine -- and bad on me for this one -- was just how out-of-sync Europe's economies could get. The PIIGS put themselves in a hole much deeper than I'd feared. And nobody but the fiercest euroskeptic thought that the PIIGS would get away for so long with, essentially, printing their own euros without permission or oversight from the ECB.

Tempers are flaring in Germany, and for good reason. The price of German reunification was giving up the Deutschmark and subsuming German interests into Europe's. And given the horrors inflicted by Nazi Germany, that wasn't a bad deal. But it's sure turned sour since.

Today's problems aside, there's still a very strong case to be made for the EU. Germany is still too big and too powerful to float around Europe without an anchor -- it's bound to bump into something eventually, badly. There might -- might -- even be a case for deeper political unification. But the euro is doomed, as it was from the start. The question now is whether it goes peacefully, or as Merkel warns, violently.

P.S. Autocorrect wanted to turn "disunification" in the headline into "disinfection."

(Thumbnail on PJM homepage by Shutterstock.com.)