Greece, Europe and Alexander Hamilton
By ROGER COHEN
NYT
MADRID — Europe has reached an “assumption” moment. The economic woes of southern “Club Med” countries have illustrated the untenable tensions of linking nations of vast economic disparities in a currency zone without a central fiscal authority or unified budget to address imbalances.
When the euro entered circulation in 2002, the notion was that the shared currency would propel the European Union toward greater political alignment. It hasn’t happened. On the contrary, resentments have grown, performances diverged. Germany is not keen to throw good money after bad to save debt-ridden Greece.
More than two centuries ago, the newborn United States faced a similar crisis of integration. With the Constitution approved, Alexander Hamilton, as treasury secretary to President George Washington, grappled with proving that the government of the 13 states that now existed on paper could function in practice. The economy was a shambles, beset by debt incurred in the fight for liberty.
In 1790, Hamilton set about establishing the financial credibility of the federal government. Central to his proposals was that the government would assume the debts of the states. This precipitated the “assumption” crisis because different states had different levels of debts and had proved more or less conscientious in paying them off.
(More here.)
NYT
MADRID — Europe has reached an “assumption” moment. The economic woes of southern “Club Med” countries have illustrated the untenable tensions of linking nations of vast economic disparities in a currency zone without a central fiscal authority or unified budget to address imbalances.
When the euro entered circulation in 2002, the notion was that the shared currency would propel the European Union toward greater political alignment. It hasn’t happened. On the contrary, resentments have grown, performances diverged. Germany is not keen to throw good money after bad to save debt-ridden Greece.
More than two centuries ago, the newborn United States faced a similar crisis of integration. With the Constitution approved, Alexander Hamilton, as treasury secretary to President George Washington, grappled with proving that the government of the 13 states that now existed on paper could function in practice. The economy was a shambles, beset by debt incurred in the fight for liberty.
In 1790, Hamilton set about establishing the financial credibility of the federal government. Central to his proposals was that the government would assume the debts of the states. This precipitated the “assumption” crisis because different states had different levels of debts and had proved more or less conscientious in paying them off.
(More here.)
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