EXCEPT THEY DON'T HAVE THE BELLS ANYMORE:

The Bell Tolls for Europe: Tide of Reform Needed to Salvage Euro (Desmond Lachman, June 21, 2005, Australian Financial Review)

From its very inception in January 1999, the single European currency made more sense as a political than an economic idea. As a political idea, the euro has brought certain benefits in its wake. Indeed, over the past five years, there can be little doubt that, the euro has helped build European institutions and deepen European political integration. Among those institutions, the European Central bank appears to be the one that functions most cohesively and that enjoys considerable prestige across the union

While the euro might have brought political benefits to the union, it has proved to be far from an ideal currency arrangement for its 12 existing members. This point is underlined by the increasingly divergent economic growth performance amongst its individual members, with all too many of Europe’s member countries now on the cusp of recession.

To many skeptics, Europe’s relatively poor economic performance should come as no surprise. For after all, how could a single monetary policy by the ECB, which a single currency necessarily dictates, be right for countries as economically diverse as Portugal, Greece, and Italy at one end of the spectrum and Germany at the other end?

Robert Mundell, the Nobel laureate, taught us in the 1960s that a successful currency union must satisfy a number of basic conditions. All too sadly, at present these conditions are notable by their absence in the European Monetary Union. These conditions include the requirement that member countries of the union be faced with similar external shocks and that they enjoy labor and product market flexibility that allow them to quickly adapt to differing cyclical conditions. In addition, a union is more likely to thrive if its individual economies are dynamic and if there is a shared identity embedded in common political institutions.

So the only condition it doesn't meet is any of them?

Posted by Orrin Judd at June 21, 2005 11:13 PM