Europe’s core countries should take preemptive action to form a smaller and more enduring currency union.
German and French policymakers have yet to face up to
Europe’s real policy choice. They could choose to continue the pretense
that the euro can be preserved in its present form. This would run the
real risk of a costly and disorderly unraveling of the euro that could
embroil a still-solvent country like Italy. Alternately, they could
choose to recognize that several euro member countries will, in time, be
forced to default on their sovereign debts and leave the euro. This
recognition could allow them to plan for the creation of a new,
well-functioning currency union among those core European members best
suited to belong to such a union.
Sadly, the recent European Summit provides strong evidence that
European policymakers are still making the wrong choice. Rather than
recognizing that the internal and external imbalances of countries like
Greece, Portugal, Ireland, and Spain have reached such large proportions
that it is almost inevitable that these countries will be forced to
default on their sovereign debts and to exit the euro, European
policymakers are striving to preserve the euro, unchanged in its present
form.
Obama, Romney, and Buffett,
listen up. In all the bickering over incentives and tax fairness, there
has been little mention of the thing that matters most of all: cash.
The election, at least recently, seems to be all about
taxes. Romney’s tax rates, Warren Buffett’s secretary’s tax rates,
President Obama’s myriad plans to raise tax rates. Democrats argue that
fairness demands a tax increase. Republicans worry that tax increases
will harm incentives to work, invest, and take risks. And besides,
Republicans point out, Romney’s tax rates aren’t that low once the
corporate tax rate is taken into account.
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