European politicians seem to have learned from their counterparts in the Obama administration. Rahm Emanuel, Barack Obama’s tough-minded chief of staff, surveyed the inherited wreckage of the American economy, and told the President, «You never want a serious crisis to go to waste.» No one can accuse the EU politicians and their bureaucrats of wasting the serious crisis created for the eurozone by Greek profligacy.

Not that they have solved it quite yet. Mere talk of bailouts and International Monetary Fund intervention didn’t satisfy the markets, which remained sufficiently wary to levy so hefty a charge on Greeks bearing bonds that the Greek government capitulated, and publicly rattled its begging bowl. It will soon be filled by a euro-zone-IMF consortium.

For the proponents of greater European integration Greece’s crisis is their opportunity to push their agenda further than they would have dreamed possible had the Greeks not cooked their books and gone on a borrowing binge to support the lavish life style of the ever-increasing number of government employees.

It was no secret that a common currency and a one-size-fits-all interest rate would sooner or later run into problems in the absence of a unified fiscal policy. Nor did anyone really believe that the 3% limit on the deficit:GDP ratio contained in the Growth and Stability pact was more than a sop to the Germans for surrendering their stable Deutschemark. But so long as the world’s economies were booming, this kink in the armor of Europe’s integrationists was of little consequence. Germany’s export machine kept rolling, Greek consumers kept importing, borrowing at attractive rates to pay for the imports, and all seemed well. Read the rest of this entry »