THERE IS NO EUROPE:

The recent leaks have made it clear the European Central Bank is implementing quantitative easing in this way because many eurozone governments are unable to pay their sovereign debt. European countries do not want to cover each other's shortfalls, either directly or by exposing the central bank to losses, a move that would make all members liable. In particular, Berlin does not want to be in a position where a series of defaults could cripple Europe as a whole and therefore cripple Germany. This is why the country has resisted quantitative easing, even in the face of depressions in Southern Europe, recessions elsewhere and contractions in demand for German products that have driven German economic growth downward. Berlin preferred those outcomes to the risk of becoming liable for the defaults of other countries.

The major negotiation over this shift took place between European Central Bank head Mario Draghi and German Chancellor Angela Merkel. Draghi realized that if quantitative easing was not done, Europe's economy could crumble. While Merkel is responsible for the fate of Germany, not Europe, she also needs a viable free trade zone in Europe because Germany exports more than 50 percent of its gross domestic product. The country cannot stand to lose free access to Europe's markets because of plunging demand, but it will not underwrite Europe's debt. The two leaders compromised by agreeing to have the central bank print the money and give it to the national banks on a formula that has yet to be determined -- and then it is every man for himself.

The European Central Bank is providing the mechanism for stimulating Europe's economy, while the eurozone member states will assume the responsibility for stimulating it -- and living with the consequences of failure. It is as if the Federal Reserve were to print money and give some to each state so that New York could buy its own debt and not become exposed to California's casual ways. The strangeness of the plan rests in the strangeness of the European experiment. California and New York share a common fate as part of the United States. While Germany and Greece are both part of the European Union, they do not and will not share a common fate. If they do not share a common fate, then what exactly is the purpose of the European Union? It was never supposed to be about "the pursuit of happiness," but instead about "peace and prosperity." The promise is the not right to pursue, but the right to have. That is a huge difference.

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