Greek Tragedy

   It's no surprise that the crisis in Greece is worsening, and may take down the entire European Union, starting with collapse of the euro. At root, the EU formed a currency union before it had a fiscal union or a political union.
   As it is, the member states retain their political independence and some keep their currency independence, even while maintaining fiscal independence. Member states go into debt without a strong enough central bank to bail them out if needed, while other member states push for austerity to solve economic problems that austerity cannot solve.
   America set up a free trade union in its earliest years, and a currency union along with a political union of the member states. Moreover, the member states of the American union must operate with a balanced budget; only the federal government can operate at a deficit. Moreover, the federal government and the Federal Reserve (America's central bank) can step in to bail out individual banks as well as member states when economic tragedy strikes.
   The tragedy of Greece is not only misbehavior and miscalculation on the part of the Greek government, but also the refusal of other member states -- particularly Germany -- to provide help in resolving the crisis. The European Central Bank, moreover, seems unable or unwilling to withstand pressure from other member states.
   It would be like New York, Pennsylvania and Massachusetts pressuring the federal government and the Federal Reserve to withhold aid to Florida, Alabama or California when a housing or other economic bubble burst.
   Years ago, when Winston Churchill called for the removal of trade barriers, he used the phrase "a United States of Europe." Whether he had in mind a full repeat of the United States of America is an open question.
   In any case, Europe has been trying to form a free trade union -- no trade barriers between member states, as is the case in America -- without a full political union, or a full fiscal union.
   It's not working. A free trade union and a currency union are good first steps, but without fiscal and political union, the EU is increasingly likely to collapse, and the Greek domino will take down the other members. Unless they step out of the line and abandon the union, in which case the EU is no more.