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There is so much shortsightedness in this whole crisis. What had to be done was clear from the start: * recognize the dangers of this crisis and act boldly *

There is so much shortsightedness in this whole crisis. What had to be done was clear from the start: * recognize the dangers of this crisis and act boldly * have much stricter controls on Eurozone countries, and have mechanisms to automatically cut expenses/raise taxes when some don't respect the rules (as Greece so blatantly did) * compensate that making the ECB the lender of last resort of the Eurozone Countries It's getting late, but there is still time to do this. But our leaders need to stop being timid and worrying so much about their reelection.

rmc 15y ago
have much stricter controls on Eurozone countries That would require some new treaties, and in some countries, require a referendum, i.e. a popular vote. If there's a big financial problem, you don't want that to hang on the popular vote or some small member states. have mechanisms to automatically cut expenses/raise taxes EU doesn't have the ability to levy taxes, only member states. The cynic in me says that with the ECB bailing out & funding several states, that the ECB already has the power to dictate taxation matters to some of those states already. Let's see if that saves the euro.
- danmaz74 15y ago
  Yes, changing the treaties now would really be a big problem; but it looks like they're thinking about bilateral agreements to start with. That would be a much faster approach. As for taxes to levy, I didn't mean that they would be levied by the EU, but that the member state would have to do that automatically to keep the imbalance in check. Not easy to enforce, but I'm pretty sure a way can be found if there is the political will.
  - rmc 15y ago
    There is rarely political will to increase taxes.
barrkel 15y ago
That wouldn't have fixed the problem. Did you know Germany broke Maastricht spending limits well before most other countries did? That Ireland had a debt to GDP ratio of ~30% before the crisis - and it never burned any failed bank bondholders because of pressure from the US Fed's Tim Geithner, as well as the ECB? In Ireland's case, the US and the ECB coerced it into forcing its citizens to take on private debt owed to foreign bondholders. And Germany would still not acquiesce to letting ECB become a lender of last resort. FWIW, Germany didn't want Italy joining the Euro, much less Greece.
- danmaz74 15y ago
  With the ECB acting as the lender of last resort, there wouldn't be a sovereign debt crisis at all in the Eurozone: Interest rates just couldn't have risen so high. I'm pretty sure that would have fixed the problem - not Greece's crazy expenditures, but the spreading of a lack of confidence in other Eurozone states debts. To get there, (mostly) the German and European leadership would have needed/need to reassure (mostly) the German public with different rules that would make a new Greek case impossible, and to make it understand that the more timid you are, the more you're going to pay for the crisis, Germany included.

rmc 15y ago

have much stricter controls on Eurozone countries That would require some new treaties, and in some countries, require a referendum, i.e. a popular vote. If there's a big financial problem, you don't want that to hang on the popular vote or some small member states. have mechanisms to automatically cut expenses/raise taxes EU doesn't have the ability to levy taxes, only member states. The cynic in me says that with the ECB bailing out & funding several states, that the ECB already has the power to dictate taxation matters to some of those states already. Let's see if that saves the euro.

danmaz74 15y ago
Yes, changing the treaties now would really be a big problem; but it looks like they're thinking about bilateral agreements to start with. That would be a much faster approach. As for taxes to levy, I didn't mean that they would be levied by the EU, but that the member state would have to do that automatically to keep the imbalance in check. Not easy to enforce, but I'm pretty sure a way can be found if there is the political will.
- rmc 15y ago
  There is rarely political will to increase taxes.

barrkel 15y ago

That wouldn't have fixed the problem. Did you know Germany broke Maastricht spending limits well before most other countries did? That Ireland had a debt to GDP ratio of ~30% before the crisis - and it never burned any failed bank bondholders because of pressure from the US Fed's Tim Geithner, as well as the ECB? In Ireland's case, the US and the ECB coerced it into forcing its citizens to take on private debt owed to foreign bondholders. And Germany would still not acquiesce to letting ECB become a lender of last resort. FWIW, Germany didn't want Italy joining the Euro, much less Greece.

danmaz74 15y ago
With the ECB acting as the lender of last resort, there wouldn't be a sovereign debt crisis at all in the Eurozone: Interest rates just couldn't have risen so high. I'm pretty sure that would have fixed the problem - not Greece's crazy expenditures, but the spreading of a lack of confidence in other Eurozone states debts. To get there, (mostly) the German and European leadership would have needed/need to reassure (mostly) the German public with different rules that would make a new Greek case impossible, and to make it understand that the more timid you are, the more you're going to pay for the crisis, Germany included.