Monday, September 05, 2011

Reluctantly, Europe Inches Closer to a Fiscal Union -

Reluctantly, Europe Inches Closer to a Fiscal Union - "It was a brief lesson from American history that served as a not-so-subtle suggestion for contemporary Europe. When an official from a European central bank met recently with a financial official in Washington, his host pulled out the Articles of Confederation, the 1781 precursor to the U.S. Constitution, to use as talking points.

The message was clear: join together in a stronger union, or risk collapse.

The story of America’s failed early effort to operate as a loose confederation of 13 states is increasingly relevant for many European officials who are grappling with the drastic problems of their own flawed 17-nation currency union. The lack of strong central coordination of the euro zone’s debt and spending policies is a key reason Europe has been unable to resolve its financial crisis despite more than 18 months of trying.

And that is why, despite all the political obstacles, Europe appears to be inching closer to a more centralized fiscal union that would eventually turn the euro zone into something resembling a United States of Europe."

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