I always have the feeling that I am starting reading about the current Economic crises "in media res", in the middle of the plot and don't fully understand what is going on. I write as a reasonably knowledgeable US native who studied many years ago in Mexico and traveled a bit around South America; my wife was born in Argentina and she also has relatives in Chile. I live in a Dominican neighborhood of NYC; partly grew up in Miami and went to school with persons from all over the world. Currency crises? I once changed $500 into currency and received, literally, uncounted millions... one would pay a restaurant in packages of ten 50,000 unit notes. That trip (to 4 nations) I never once dared enter a bank or even, heaven forbid!, use a credit card. Indeed in those days I could never figure out how an Argentinian bank, for example, could even operate from week to week. And the differences between a street price and the "official" were transparent and not less than 20-30%.

But neither Greece nor the rest of the European Union suffer from hyperinflation. Nor could Greece, as YV has specifically p;pointed out elsewhere, simply change the peg to a hard currency such as the dollar or Euro to reflect the reality of an unbalanced exchange rate or a balance of payments problem, That's What A Single Currency Is All About.

But now, Greece has apparently "bailed out" other, transnational lenders by nationalizing private debt, I gather. It would appear that perhaps a third of the government debt is of this nature (More?), but that too is irrelevant to this discussion.

The issues seem to me to be (1) How could bank bailouts of this scale be made and yet leave the Greek banking system with no liquidity or ability to make modest, secured business loans for years, not just the last 12 months?; and isn't there a European central bank? (apparently not one permitted to buy government bonds--so how does the European central bank control the money supply, and I'm not talking about currency?) 2. If the Euro is a single currency, the only reason that there should be withdrawal limits is if the local banking institution is truly insolvent. If that is so the bank must be taken over or sold, restructured etc.--an issue for bank regulators, accountants, etc. At the least depositors should be paid off to the extent of deposit insurance (how much is this) or a new bank created by the regulators. That's what banking systems DO. But instead as YV is pointing out, some Euros are created more equal than others. Which THEN sets up situations with a family resemblance to other currencies that have tried to dollarize (Argentina, for example) once the economic situations and financial flows between the two nations no longer harmonize, then the link will only be maintained at the ultimate cost of economic catastrophe.

To this foreigner, the Euro is thus revealed as no real common currency. And never doubt that this thought is beginning to work its way through the thoughts and perceptions of individuals throughout Europe and the world. I always wondered (20-25 years ago) how, at the most basic level, one could have a currency without a nation state, a national budget (however limited) coordinated financing of pensions and unemployment systems, etc. and of course, a real national bank (however otherwise limited by ideological blinders that might support mistaken actions) which at the least would in theory have the power to act to create money, resolve liquidity crises, etc.. I thought that necessity would dictate that these other institutions would soon develop. They haven't, and this it would seem, is YV's point.

The tone, snide comments, innuendo, bogus false superiority, etc. of many commenters here, and in the past at other venues, I just don't get. YV's suggestions aren't Marxist or particularly radical except to the most radical neo liberals. Actually middle of the road, commonsense establishment policymaking of a generation ago for the most part. But maybe at 68 y.o. I'm just an old man, blind to the realities of the modern world. Makes one hanker for FDR, JM Keynes, and JK Galbraith, and even (God help me!) Nixonian economics (or even Gerald Ford)--FYI: a room Kissinger never entered.