When you look at the exchange rate between the Euro and the U.S. dollar, the Euro is still the stronger of the two, or at least has the higher value. Yet when you look at financial crisis still sweeping through some countries within the Euro zone, it is hard not to wonder how long the Euro can sustain itself with entire country's economies on the brink of collapse. You can look at any number of reasons why there are currently issues with the Euro and still not fully comprehend the entire problem that the region is facing. What it all boils down to is that there is no central government with enough power to control how certain country's deal with financial crisis. Each country within the Euro zone is completely autonomous despite the currency that ties them together. Each country has differing fiscal policies, different ways of running their countries, and perhaps most importantly, different cultures and mores when it comes to every day life, work, and money. These have all played a vital role in dictating to a certain extent how this crisis has unfolded and perhaps will dictate in the future whether or not the Euro is sustainable or whether it was just a bold failed attempt to unite country's under one currency. To me, the biggest factor is that there are two competing structures within the Euro zone, the European Central Bank and the individual countries that are members of the EU. While the Central Bank is responsible for monitoring the flow of money and ensuring the money goes where it is most needed, it has recently been shown to be at odds with member country's fiscal policies. While working quite well in times of prosperity and little economic strife, it has been shown through the financial crisis that there are some grave issues that need to be resolved if the Euro is to survive as one unifying currency.
In order to fully understand why there are currently issues within the EU, perhaps it would be best to make a comparison to the United States. I am not saying that one structure is better than the other because believe me, the United States has faults of its own, however, in regards to monetary policy, perhaps we can gain a few insights with the comparison. To me, the EU would be like taking all 50 states and making them independent countries. Nebraska could run itself completely differently with different laws and governing structure than say South Dakota yet still share the same currency. If Nebraska ran into trouble because they didn't manage their money well enough and needed a "bail out" if you will, you can be damn sure that South Dakota would put up a fight arguing against it because they seem to be doing just fine. S.D. would probably want Nebraska's fiscal policy revamped and stricter controls put into place if extra money were to be sent there. Nebraska would balk saying that they can't be controlled by some external force. The situation would end up in a stalemate with neither side completely moving towards the middle and working with the other. Why? Because each one is a sovereign state with its own interests to guard and its own populations to keep happy. Sound familiar? Obviously I am taking hints from the EU to make the comparison, but I can completely understand why there are so many issues when it comes to resolving the financial crises that are embroiling certain countries within the EU while others are doing remarkably well (Spain and Germany respectively and lets not forget about Greece). To me, the only way that the Euro can show its sustainability is to create more of a central government that has the ability to enforce certain policies, fiscal or otherwise, within the EU's member countries. Yet I personally don't see that happening either.
In order for more unity to occur within the EU and for the EU to be sustainable in the long run, it would mean there would have to be more blending of countries. There would have to be some unifying fiscal policy that all countries would adhere to along with a centralize government that actually had the control to enforce those policies. As it is, I see the cultures amongst the member countries as being too radically different for something like this to ever happen. The individual cultures of the countries has a lot to with this current financial crisis. Reconciling a relaxed Spanish culture with a more rigid German culture is, I would imagine, extremely hard to do. In the United States (while different states can feel like different countries at points) the underlying culture is more homogeneous. The United States, to coin the old term, is a melting pot where cultures have come together, unified, and become a separate entity altogether providing some unifying substance to the people who live here. In Europe, bringing centuries old cultures together and making them all function harmoniously would be a very hard thing to do. I am not saying it is impossible, it would just take enormous amounts of flexibility on separate countries parts to make it happen. I am not suggesting that Europe become a melting pot like the United States. I think that each country within the EU has its own special place and I wouldn't want to see that diminished, however, there needs to be some blending of policies, cultures, and yes, ego's if things are to get any better. Anyway, that's what I think needs to happen if the Euro is to live on. I could be totally wrong, and if I am, I ask that someone enlighten me as to what would be a better move. For now, lets just hope that the EU gets their act together and prevents another full blown, world wide financial crisis from consuming us once more.