Euro Area

[phonicsmonkey]

make it up as they go along and ignore all lessons learnt by other nations who have fused (UK,USA etc)?

This - failure was not to be contemplated!

In the CFA institute journal for July/August the point was made that the theory of optimum currency areas (Mundell, 1961) states that it is in the interests of a group of nations to form a currency union if and only if the mobility of the factors of production (labour and capital) within the proposed union is greater than the mobility without. This is to provide the economic flexibility to offset the loss of the ability for the individual nations' currencies to fluctuate.

For a number of reasons that doesn't hold (and has never held) in the case of the Euro, and that situation has worsened since 2008 with capital being effectively nationalised. Hence the current crisis is almost unavoidable with economic imbalances arising, worsened by irresponsible fiscal decision-making.

[Fragony]

'So how will the EU handle a military junta attacking a democratically elected member state?'

As always, MOAR POWER TO BRUSSELS