The silly, pie-in-the-sky question I've always wondered about the European Union is: What is the E.U.'s stance on secession by a member nation? Would they go to war to keep a member state?
The answer I'm normally given is that the E.U. wouldn't fight the secession of a country, but that, practically speaking, secession becomes impossible since going off the euro is too complicated. But what if it was possible to transition out of the euro?
Italian minister Roberto Maroni now says that Italy should hold a voted about going back to the lira. It's interesting to wonder what happens if the United Europe project fails.
1 hour ago
This situation is not without precedent...Think "Tower of Babel".
Bottom line? it would suck. Robert Mundell is right on...the world needs less, not more, currencies to foster more free trade and create the foundation for stable economic growth.
Actually the ideal is one currency, the original model for this being the Roman Empire 100 years after Caesar, which was essentially a giant free trade zone.
Even given the tendency for EU regulators like Mario Monti to f*** things up, the Euro currency's positive macro benefit outweighs the Euro leviathan.
And on a minor note, ***hole vultures like Soros would have less opportunities to get rich in f/x arbitrage.
Key difference between the United States and the European Union: If, as a state, you try to leave the union, the armies of righteousness will trample down upon you, burn your cities, free your slaves, and generally liberate the hell out of your sorry ass.
If, as a country, you try to leave the European Union, the armies of self-righteous plutocracy will call you names, hold emergency meetings, offer you concessions, and then smile wanly at the press conference where you amicably sign the paperwork formalizing your departure.
Because the European Union is not a state, but rather a treaty organization, any member state retains the formal right to abrogate the treaties and leave the European Union. Greenland, or Kalaallit Nunaat as the locals call it, did just that by referendum in 1985.
Further, the use of the euro need not complicate things. A country can remain in the EU and not use the euro, and countries outside the EU may use the euro, whether by formal agreement, like Monaco, San Marino, and Vatican City, or on a de facto basis, like Andorra, Montenegro, and Kosovo.
"Would they go to war to keep a member state?"
Would a housecat attack a vacuum cleaner to make it stop?
Would a monkey type the entire works of Shakespeare for a banana?
Would brave Sir Robin, who had nearly fought the Dragon of Angnor, who had nearly stood up to the vicious Chicken of Bristol, and who had personally wet himself at the Battle of Badon Hill, stand up to the black knight?
Moroni is a member of a party that was created to split Italy into two separate countries. He's not a force to be listened to.
Not to be disagreeable, but one world currency is not optimal (and Mundell said this). If there was one currency, and one Fed setting rates, then anyone whose business cycle is not synchronous gets hit hard.
One reason we survive in the US with one money is that we have a progressive tax system and pay most of our tax to a federal government that smooths this stuff out. Absent a serious Euro government, the European Central Bank gets shot at from the weaker economies, as Germany and Italy are doing now.
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