[mseebach]

It was certainly very convenient for the germans to have some takers for their cheap bonds, but the fact remains that nobody forced the peripheral countries to live beyond their means and to refrain from implementing necessary reforms.

[graeme]

The difference is that in the past, the peripheral countries were able to live beyond their means without such drastic consequences.

Too much debt? Devalue the peseta and drachma. Exports increase, imports decrease, unemployment adjusts. Lenders knows that they must charge higher interest rates to those countries.

That process can't happen anymore. So the same behavior that was mildly damaging before suddenly became very, very damaging. Neither Southern nor Northern European leaders fully recognized this problem when they created a single currency.

[dpe82]

Some recognized the problem, but they were largely shouted down. The single currency has always been a political initiative, not an economic one.

[Someone]

I think they fully realized the problem, but did not think it's consequences through enough; there were (and are) fairly stringent rules for entry to the euro zone (http://en.wikipedia.org/wiki/Euro_convergence_criteria), but were lax in enforcing those rules. There are several reasons for that. Let's say the economy of X is down because it is inherently weak. Do you fine them because of it? Do you think that would help their economy? Also, if half the economies are breaking the rules, how are you going to get a majority in the EU parliament for bringing those fines?

[gyardley]

Nor did anyone force countries like Germany to share a common currency with them.

I've never really gotten why one country would want to share only a currency with another country, while leaving their social and economic policies independent. But now that that's happened, the combination gets to stand or fall as a whole.

[tsotha]

The plan was "harmonization" of tax and spending policies. It's not really any secret the people actually running Europe were trying to cobble a United States of Europe together, first by sharing a currency and then by moving all the decision making to Brussels over time.

Of course Italians and Spaniards don't have any desire to become Germans, and vice-versa. The currency part was easy - the "harmonization" part will take generations if it happens at all.

[dpe82]

Indeed. It's hard to "harmonize" countries or regions that don't speak the same language. Workers can't easily move from country to country to take advantage of job opportunities (and thus spread culture through direct interaction), and there's little shared media.

[onemorepassword]

Language is a doable barrier to overcome, and so is harmonizing various regions on a regulation level. Remember that in Europe those cultural differences exist within countries and have for centuries. Hell, Brussels itself symbolize that.

If you think they don't easily move from country to country, I suggest you visit London, Amsterdam or Berlin.

Harmonization is a political issue, and what hampers it is selfish and corrupt politicians.

Making it a cultural issue is dangerous nonsense. An average Greek would be quite happy to live under German style regulations, if he could trusts the authorities to play by the rules. Ordinary people and their cultural differences are not the problem.

[tsotha]

I think you're underestimating the culture problem here. The average Greek probably would be happy to live under German style regulations. But would he stop cheating on his taxes? I have my doubts.

[brazzy]

Except lots of workers are doing that right now. And there's a reverse movement of retirees. Maybe the crisis will after all end up faciliarting that harmonazation whose lack caused it...

[tomjen3]

Germany struck a deal with the big counties after the liberation of east Germany that allowed them to reunited. The common currency was meant as a way to tie Germany to the rest of europe and prevent them for going Nazi again.

Germany agreed because reunification had been a dream for decades.

[touristtam]

... the liberation of east Germany ....

You will find that "collapse of the East German state (DDR) after the wall was brought down" is more inline with history.

... and prevent them for going Nazi again ..... ?

Sorry but this is wrong on at least two level:

1. Nazism is a political movement (regardless of your political inclination). And thus not directly impacted by having a currency or another. 2. Nazism is way too present, still, in the memories for it to make a come back in Germany as a legitimate political endeavour.

The creation and adoption of the Euro currency was a natural political continuation of the ECSC (see http://en.wikipedia.org/wiki/European_Coal_and_Steel_Communi...) and extension of the European Union. Now yes the initial intend is to prevent future Pan European war through economical cooperation, but not solely to prevent Germany "to go Nazi again" (despite the comment one can read about French President Mitterrand and British Prime Minister Thatcher regarding the future of Germany in Europe, neither of which should be regarded as anything but power hungry political leaders).

[dualogy]

> nobody forced the peripheral countries to live beyond their means and to refrain from implementing necessary reforms

Actually, to "force members to stop such ways" was the plan for the EUR/ECB/Maastricht from the beginning. But it's either not working out as planned, or taking way longer than planned.....