Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Well, it's a currency union but not the fiscal union.

Which means that pretty soon it won't be.

Again, this should not be a terribly controversial point. We've had three or four currency unions blow up just in the last seventy years over precisely this flaw.

It's a good thing the BuBa's economists aren't running nuclear plants. With that sort of record, most of Europe would be a radioactive exclusion zone by now.

the problem is that Germany is so damn big, its development does carry. You can't see Greece in aggregate inflation data. That why Germany is a big chunk of 'core' while Greece is 'periphery'.

But Greek unemployment does show up in the aggregates. Greece has, what, 5 % of the Eurozone's population? With ten percent unemployment, that's half a percentage point in the aggregate. That's measurable.

Of course, if you believe that the Eurozone needs five percent unemployment, because you want to use unemployment to sweep structural inflation under the rug, then Greek unemployment can go clear to 50 % before the ECB feels compelled to act...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 19th, 2011 at 07:34:28 AM EST
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