“I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created.”
– Romano Prodi, EU Commission president, December 2001
Prodi and the other leaders who forged the euro knew what they were doing. They knew a crisis would develop, as Milton Friedman and many others had predicted.
It is not conceivable that these very astute men didn’t realize that creating a monetary union without a fiscal union would bring about an existential crisis.
They accepted that eventuality as the price of European unity.
But now the payment is coming due, and it is far larger than they probably anticipated.