The euro's failed experiment
Policy making under the euro has failed because balancing the needs of stronger economies with weaker ones has been an impossible task
The euro-zone experiment is over. European Monetary Union should have carved out a brave new world for Europe. But it has all gone horribly wrong.
The fault lines have been in evidence for years. It is just a matter of time before the cracks turn into deeper fissures and weaker nations fall over the edge and crash out of the single currency. The writing is on the wall for EMU and the euro. It could happen within the next two years.
Critically, EMU has failed to deliver on the promised land of sustainable growth and job creation. The recovery is flagging and deflation threatens. Unemployment has soared to 12 per cent. Many weaker euro-zone nations remain saddled with crippling debts with little chance of repaying them. Euro zone policymakers remain paralysed with fear about what to do next.
The one-size-fits-all European Central Bank monetary policy ... has been a complete myth
Policy-making under the euro has failed spectacularly. The root cause has always been managing the euro zone's economic diversity. Two-tiered Europe has never worked under the euro. The one-size-fits-all European Central Bank monetary policy that supposedly works for the euro zone's 18 separate business cycles has been a complete myth.
Trying to balance the policy needs of Germany, Finland and the Netherlands on one side of EMU with Greece, Cyprus and Portugal at the other extreme has been an impossible task.
ECB thinking has always been dominated by Germany's inflation-obsessed Bundesbank, with the needs of weaker euro-zone nations taking a poor second place. Hopes for a change had risen with the arrival of Italian Mario Draghi at the ECB's helm.
But inertia to change still dominates. Last week's ECB policy meeting failed to deliver the vital breakthrough expected for the next tranche of monetary stimulus. Policy was left on hold.