Distinguish real EU crisis solutions from the usual fakes.


Which solutions for the EU can really help, as opposed to the short-term tranquilizers?

Here is a list of five criteria to distinguish real vs. fake solutions.

Unless any solution proposal addresses at least some of the following issues, its effect on the EU and global market sentiment will at best be limited and temporary.


The need to centralize control over EZ budgets
To get out of debt and to be able to enact and enforce responsible budgets that keep the EU solvent, the EU needs to become a well-run US of Europe with a fully empowered central bank, and the regulatory and police powers to impose and enforce rules of responsible economic management.
The need to cede sovereignty in order allow said centralization
In order to become the US of Europe, 17 proud sovereign states with long and glorious histories and rather different attitudes about how to run an economy, must cede control over monetary and fiscal policy to a central body that not all nations would trust.
That means effectively ceding sovereignty and control over national destiny, or at least reducing it to a level similar to that of the American states.
The balance of evidence strongly indicates that there’s little real will to do this.
Germans and other northern funding states will not risk having undisciplined southern European attitudes towards economic policy and inflation imposed on them, nor are the GIIPs in any way ready or able to adopt the disciplined northern mindset towards spending and taxation, and related issues regarding social benefits.

The need for more time to reconcile conflicts
The EU could have no more than a number of weeks until Greece defaults, given that is has utterly failed to keep most of the conditions needed to get the next tranche of bailout cash loans.
With Spanish and Italian borrowing costs at unsustainable levels, it’s hard to see how either would avoid default once a Greek default starts a wave of bank defaults and insolvency that radiates outwards and to banks and sovereigns across Europe.
The need of an intermediate solution while the US of Europe is being organized
The only way around the time constraints is a new and large source of interim funding for the 5-15 years needed, be it gifts, debt forgiveness or asset sales. Conversely, disregard any solution that involves piling on more debt to nations that cannot pay back current debt load. That may buy some time, but not much.
The need to show unity, direction and will
In order to create the US of Europe, The EU needs to ask the world to lend, donate, or accept the printing of the trillions needed to tide it over for the next decade. The EU should behave like it is united behind a plan and simply needs 5-15 years of funding to keep the GIIPS and anyone else solvent while it organizes all the details needed to get the US of Europe functioning.

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