“A substantially more comprehensive economic union might be needed to stabilize the euro area… Already in 1990 the Bundesbank argued that a political union might be a prerequisite for the smooth functioning of European monetary union.”
The problem — as economists, EU policymakers and market participants know — is that it is politically near-impossible.
Not only would it mean surrendering sovereignty — few issues are more sovereign than collecting taxes and running and financing a budget — but it would be the bailout to end all bailouts: wealthy central and northern European countries such as Germany and the Netherlands quite literally assume the collective debts and risks of the likes of Portugal and Greece.
“It would mean denouncing your own country and there is way too much nationalism at this point for that idea to get anywhere close to reality,” said Mark Grant, managing director of structured debt at Southwest Securities in Florida. [bron]
Not nationalism. Common sense!