It’s increasingly looking as if the Eurozone doomed the euro’s long-term sustainability right from the get-go.
The currency has a lot of problems, but we should focus on two key rules that were broken almost immediately after the currency’s creation, and then completely ignored despite the fact that these ‘lies’ were in plain sight:
The euro had hardly been introduced before the monetary union turned into more of a debt union. Violating the union’s self-imposed rules of solid budget practice soon became routine, and not only in Greece. Sometimes it was done openly, and sometimes not. Sometimes it triggered conflict among the member states, while at other times there was mutual agreement over the practice. In general, the offenders seemed to believe that things would work out in the end, and that others would foot the bill.
The first lie was soon followed by the second. The euro-zone members had promised to support the common currency with a common policy. The problem was that they were not prepared to make good on their promise. Instead, each of the 16 euro-zone countries behaved, and continues to behave, as if it were still managing its own currency. Each country went its own way when it came to lowering or raising taxes, or borrowing money or cutting costs, almost as if it were expected not to take the other euro countries into account.