Despite recent signs that a complete collapse is no longer imminent, Walter Russell Mead say that Europe Is Still Hip Deep In The Bad Stuff:
Many European leaders quietly accept that the Greeks will fail and that sooner or later a new drachma will be born. What they still fight is the idea that the Italians won’t change much either. Prime Minister Monti will say whatever he must to keep the funds flowing, and the Italian parliament will pass any law if a gun is pointed to its head, but no power on earth can make those laws work. Italians have more than a thousand years of cultural experience resisting the demands, sensible and otherwise, of foreign overlords. Behind the technocratic new government, the old factions and alliances are constantly at work: imposing facades of reform programs will be built, but somehow the termites will have hollowed them out. As we’ve observed before, trying to force reforms on Italy is like trying to nail jello to the wall.
If Europe had tried to design the best possible currency regime for the people it had, it probably would have designed two different currencies: a neuro for the hard charging north and a seuro for Club Med. Instead, it designed a currency for an idealized European public that did not exist: more disciplined in the south and more generous in Germany than the actual Europeans are.
Europe’s core plan now seems to be to make the south disciplined enough so that the Germans become more generous: that is, under much worse conditions Europe’s leaders are doubling down on the original bet.
So the plan is to make the Italians behave a little more like Germans and visa versa? Cultures that have developed over centuries will be transformed in the next few years because bureaucrats in Brussels dictate it? As Mead says in closing his piece, we shall see.