... some amateur economics, for which if you want the whole and professional story, check out Paul Krugman's Times mag story from a year and a half ago (or his Canadian article from---wow, the late 90s): The Euro, the intended monument to the unification of Europe, is what is tearing the continent apart. Krugman would specify that a currency union, if not chaperoned by economic or fiscal union, is very likely to spend the later hours flirting with disaster. The Eurozone nations cannot set their own monetary policy, which ordinarily can be used to fight slumps and inflation, because the entire continent uses the same money. So contractionary policy desired by inflation-obsessed Germany, for instance, simultaneously effects depressed Spain, which is need of expansionary policy. The same's true in America, but unemployed Las Vegans can easily move to booming Northern Virginia---they speak the same language and serve the same Big Macs there---but it's quite another than for a Barcelonan to move to Hamburg. And when Nevada and the Florida panhandle slump, the federal government bails them out---more Social Security and unemployment money goes into the region than payroll taxes come out---but there's no such transfer payments between European countries.
And some history, which is still amateur but in the case of which I actually do know a bit whereof I speak: Helmut Kohl and Francois Mitterand knew this all would happen. Or rather: They knew it was a risk, which they thought would diminish over time and ultimately, at the moment of crisis, would ultimately be resolved by their political heirs. That is, they forgot entirely the political logic of depressions.
It's not a coincidence this treaty followed so soon after the reunification of East and West Germany. Recall the rest of the 20th century was a story of Germany bullying its neighbors; the French followed their traditional role of seeking to counterbalance its rivals, not to win Europe but to keep any one nation from gaining too much influence and so preserve the community of nations, and the Germans for their part were, by 1990, rather abashed at their national history. Both sought to subsume German influence within a larger European community, so the political will to bring the European Union into existence was there, and that extended to currency union.
But less consensus existed about the inconvenient details of what that currency union would require. Specifically, German voters were both terrified of inflation (the widely held but incorrect belief is that the hyperinflation of the 1920s was what brought about Hitler; that inflation was solved by 1923, and Nazi vote shares did not rise until unemployment skyrocketed after 1929) and insistent that they never be made to pay the debts of other nations (this experience from the Treaty of Versailles may have been more reasonable). So the ECB was given only a single mandate, to keep inflation low, in contrast to the Federal Reserve's double mandate to manage both inflation and unemployment. And Kohl made the following promise to the German people: you never will have to pay for the debts of your neighbors. Kohl almost certainly knew this promise could not be kept, but the hope was that, as Europe became further and further interlinked, the Germans eventually would abandon their natural suspiciousness and realize their equal stake in the common European project. Europeans of all nations would learn the value of tariff-less trade, open borders, sped-up passport lines, and the free exchange of goods, services, and individuals. It's a lovely vision of Kantian cosmopolitanism that such liberality would eventually make the Germans, as well as their neighbors, forget their nationality and identify solely as European.
Until the mid-oughts, this might have looked prescient. But when the economy cratered and everyone started losing money, the psychology of financial panic reappeared. And the common future of Europe was revealed to be merely a comforting dream, not a new reality. The Danes closed their borders. Hungary changed the constitution to subvert democracy. The Greeks voted in droves for both socialists and neo-Nazis. And the Germans once again asserted their dominance over the continent, although this time through economic measures. There's not tanks rolling in Paris or the Sudetenland this time, but the reader will be forgiven for thinking she's seen this movie before.
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