It's not widely discussed on this side of the Atlantic, primarily because it is not considered a relevant topic here. But, with the intertwined global economy it's not something we can even ignore anymore, just because we happen to use the dollar as our currency.
But it was in 1998 that certain European countries decided to give up their national currencies and use a unified common currency that become known as the Euro.
For all of you that have traveled to Europe since then, you know about the Euro, know what the bills and the coins look like.
What is not widely known is that unified currency contract was established with a significant omission of several crucial factors...
It was established without any consideration of the Economical differences of each of the member countries: Germany's then currency, the Deutsche Mark, had attained it's value and stability through the strong foundation of Germany's predominantly manufacturing based economy. Currencies of some of the other European countries did not have that strong foundation. The values of alot of the South European Currencies were more loosely related to services industries such as tourism. Manufacturing had never developed to such degree in countries such as Portugal and Greece.
So, across Europe we had strong currencies and not so strong currencies, that in 1998 all became lumped into the newly designated common currency called the Euro.
Even so, it would have all worked out fairly well, if it wasn't for the fact that alot of the services-heavy economies in Southern Europe were never able to gather enough national revenue through taxes to keep their national deficits in check.
So, now, Europe has rampant national deficits in countries such as Portugal and Greece, who due to the ratified common currency, now have to bailed out by other European countries who also use the Euro currency.
Obviously, countries such Portugal and Greece cannot counter their own deficits by having more money printed, since the inflationary effects would reach across all Euro-currency nations. So they have to be bailed out by by existing Euro currency from cash-rich Euro nations.
I think it's time that European Leaders should ask themselves, whether the Euro, as well intended as it might have been, could actually end up being a failed experiment! Because, I don't think this issue will be resolved long-term without countries such as Portugal and Greece having to fundamentally uproot and alter their services-based economies to uphold the value of the Euro currency.
Austerity is not going to be a solution, because all it will do, is to harm the cash-strapped economies even further, while at the same time, causing revolt as wittnessed during the "protest" election results in Greece.
Europe might end up being forced to rethink the Euro currency, altogether.