What we're seeing in this map I think is not just your everyday failure of monetarism (trying to control and balance out complex economies with only a single va

What we're seeing in this map I think is not just your everyday failure of monetarism (trying to control and balance out complex economies with only a single variable which is also an extremely heavy, blunt tool - interest rates). I think the problem is deeper, being a combination of a) misguided treaties based on bad economics (some would call it 'neoliberalism') like the so-called "Stability and Growth Pact" (which actually restricts member state's ability to deal with financial crises) and the way the ECB has been set up to not make fiscal transfers between states (or the equivalent, directly buying bonds from member states), and b) the madness of fixed exchange rates between the member states, by having a common currency without a federal budget. It mostly comes down to the Euro - what we see with countries with flexible exchange rates is that their economies don't have to internally devalue with changes in inflation, terms of trade, etc. because the exchange rates changes and just balances it out. But in Europe with the common currency, compared to Germany's economy the Euro is weak, meaning their exports are more competitive, and compared to the weaker economies the Euro is strong, which means imports are cheap but exports uncompetitive. This is self-propagating, so Germany has been able to massively increase its trade surplus at the cost of the weaker countries' increasing trade deficits and increasing unemployment, because they are internally devaluing to compensate. There are two ways to solve this - either do what the US does for its states with a federal taxing and spending Government (meaning fiscal transfers from the stronger economies to the weaker ones to balance this out), or abandoning the Euro and having individual currencies with flexible exchange rates. Business as usual will see Spain, Portugal, Italy and eventually France in the same boat as Greece...