Marshall Auerback — Has ‘Super Mario’ Really Saved the Euro?

The structure of the EMU and ECB relative to the sovereign nations of the EZ was problematic from the outset and the onset of crisis was destined to test the boundaries that had been erected to guarantee fiscal and monetary discipline.

1. The ECB was not to function as the lender of last resort in the interest of monetary discipline 

This had to be pitched to hold the union together.

2. Nations joining the EMU would give up currency sovereignty, subjecting them to the possibility of default, to ensure fiscal discipline.  

The ECB finally had to declare it was ready to purchase national bonds in any amount to aviod a nation becoming insolvent, on certain "conditonality" that would further erode national sovereignty.

3. Nations joining the EMU would sacrifice policy space for the advantage of a common market, a common currency, and a common central bank, as well as to eliminate fiscal profligacy. 

This is now the stinking point. Without policy space a number of countries face depression with no light at the end of the tunnel. Can the political bulwark of the state hold, or will some states crumble politically with uncertain consequences that are uncomfortably similar to the 1930's?

Thus is where we stand now, waiting anxiously and unsure of what to anticipate from TPTB, but expecting the worst as long as they seem committed to make populations pay for elite mistakes and overreach.

New Economic Perspectives
Has ‘Super Mario’ Really Saved the Euro?
Marshall Auerback