And is the "stabilization pact" all about preventing one country's reckless fiscal policy from hurting the other 11?
I don't know what the motivation was behind the "stabilization pact," but that would certainly make sense.
The EU becomes a bit messy here. State governments in the US have, I believe, the ability to issue debt in dollars, though most have balanced-budget amendments written into their constitutions. However, their borrowing is backed by the federal government with the "Full Faith & Credit" clause. Who is backing the 12 debt-issuing countries of the EU?
One of you can probably fill me in on the law. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
On the other hand, the Mediterranean countries fiddled with their accounts in order to meet the "Maastricht convergence criteria" needed to join the Euro.
I guess nobody's perfect.
Italy's being royally screwed by their inability to apply their traditional fiscal policy, which involved large devaluations of the Lira at regular intervals. They can't touch the interest rates, they can't borrow above 3% and they can't inflate themselves out of trouble. I guess they'll have to learn to run their economy like everyone else. guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
