September 6, 2011


Europeans Talk of Sharp Change in Fiscal Affairs (LOUISE STORY and MATTHEW SALTMARSH, 9/05/11, NY Times)

Recently, for instance, when an official from a European central bank met with a financial official in Washington, his host brandished the Articles of Confederation, the 1781 precursor to the United States Constitution, to use as an example of why stronger unions become necessary.

The story of America's failed early effort to operate as a loose confederation of 13 states is looking increasingly relevant for many European officials. The lack of strong central coordination of the euro zone's debt and spending policies is a crucial reason Europe has been unable to resolve its financial crisis despite more than 18 months of effort.

The lack of progress has contributed to steep declines in European stocks recently, sending tremors through markets in the United States as well. On Monday alone, several major European markets fell more than 4 percent while markets were also down on Tuesday morning in Australia and Japan.

And that is why, despite all the political obstacles, Europe appears to be inching closer to a more centralized approach, and some officials are going public on the issue.

"If today's policy makers want to successfully stay the course, they will have to press ahead with structural changes and deeper economic integration," António Borges, director of the International Monetary Fund's European unit, said in a recent speech. "To put the crisis behind us, we need more Europe, not less. And we need it now."

It would obviously be beneficial to Southern Europe if it could gain more control over Northern, but what sense does it make for the North to bind itself to the more rapidly dying South?

Posted by at September 6, 2011 6:41 AM

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