Louise Story and Mathew Saltmarsh, writing in the New York Times, see signs of inching toward a European fiscal union - in effect, a United States of Europe.  The motivation is obvious - the apparent instability of the Euro zone as currently constituted - but the obstacles are enormous.  I don't expect it to happen, at least not until the Euro sheds a few of the weaker members, but the implications would obviously be huge.

One problem is that the situation is evolving rapidly, and politics moves with glacial speed.  The other problem is the question of who gets what.  So far the bankers having been driving this train, and I would be very surprised if European citizenry would be willing to give up so much to save a bunch of bankers who got into this problem mostly through their own stupidity.

At some point, I think, the insolvent banks need to be annihilated or reorganized.  And how about requiring adequate reserves for credit default swaps and other insurance catastrophes in waiting.


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