If Greece or Spain were California!

The long forecast euro-wreck has arrived, the jagged rocks surround. As I blogged last week, if the Eurozone or the EU mount a rescue for Greece then the end result will be tyranny in Europe. AFP reports that Juncker declared Borg's call for greater IMF surveillance and monitoring of Greece to be an "absurd" irrelevance "fuelled by Anglo-Saxon voices" seen as hostile to the shared currency. "If California had a refinancing problem, the United States wouldn't go to the IMF," Juncker said.

The response to this smug, self-satisfied tripe from the federalist Luxembourger who has always been at the forefront of further EU federalization, is contained in an Op-ed in the IHT by Paul Krugman, linked here, from which I quote:

Now, if Spain were an American state rather than a European country, things wouldn’t be so bad. For one thing, costs and prices wouldn’t have gotten so far out of line: Florida, which among other things was freely able to attract workers from other states and keep labor costs down, never experienced anything like Spain’s relative inflation. For another, Spain would be receiving a lot of automatic support in the crisis: Florida’s housing boom has gone bust, but Washington keeps sending the Social Security and Medicare checks.

But Spain isn’t an American state, and as a result it’s in deep trouble. Greece, of course, is in even deeper trouble, because the Greeks, unlike the Spaniards, actually were fiscally irresponsible. Greece, however, has a small economy, whose troubles matter mainly because they’re spilling over to much bigger economies, like Spain’s. So the inflexibility of the euro, not deficit spending, lies at the heart of the crisis.

None of this should come as a big surprise. Long before the euro came into being, economists warned that Europe wasn’t ready for a single currency. But these warnings were ignored, and the crisis came.