Quote Originally Posted by drone View Post
Without the euro, those countries would not have borrowed as heavily since they would be stuck with the higher interest rates. I imagine they would have just stagnated rather than go through the bubble/collapse cycle. The problem with the Euro was the same as the problem in the US - banks lent people/governments cheap money they couldn't realistically be expected to pay back (rating agencies ftw!). The Euro prevents localized corrective action by the federal bank.
Yes, I agree with this.

Which is why I've always said that the stability pact (i.e. limits on deficit spending) should have been actively enforced on day 1. I don't think anybody disagrees with that now.

We have to get through this crisis one way or the other, and after that ensure sustainable financial practices by the member states. Putting a cap on deficits is not enough; countries should work to decrease their debt levels when times are good.

If you'd ask Dutch citizens, most would answer that they'd approve of strict measures and penalties against PIIGS countries for their deficits and debt levels. At the same time, our government's policy of austerity to reach the 3% deficit target is pretty unpopular - while our austerity measures are a walk in the park compared to what the PIIGS countries are going through. Some people here complain all the time that the government is acting against the will of the people. Personally I would not like the economy and politics in general to be run as if it were American Idol or Britain's got talent.