John Cochrane writes,

The euro was explicitly set up as a currency union without a fiscal union. (And it turned in to one without a bank regulatory union.) That can work, a fact which practically all commentators ignore.

The central ingredient is: sovereigns who can’t pay their bills default. The European central bank does not print up euros to bail out sovereign creditors, either directly or via the subterfuge of lending to banks who then buy the sovereign debt.

The euro was explicitly set up this way. The main problem is, when the crisis came, nobody bothered to read the instruction manual.

Actually, my understanding of the instruction manual is that governments were supposed to operate with responsible budgets. People did read the manual–and ignored it.

Which is the primary source of the crisis?

(a) trying to use a common currency when labor is not mobile between countries

(b) governments running unsustainable budgets

I vote for (b). However, you will not see many commentators on the left shouting from the rooftops that (b) is a problem. Instead, they do the opposite when they decry any attempt to rein in deficit spending as “austerity.”

A lot of people want you to believe that the progressive agenda is the victim of Angela Merkel and Paul Ryan. But an alternative perspective would suggest that it is the victim of arithmetic.