The recent Irish banking crisis clearly depicts that Euro makes little sense, because the European Union lacks taxing, spending and regulatory authority which are critical in managing a modern economy.
The U.S. federal government regulates banks and financial institutions and ensures deposits because continuously functioning banks are as essential to modern economy as uninterrupted electricity, infrastructure and the Internet. Ireland government, not the EU, regulates and ensures the solvency of Irish banks.
Irish treasury doesn’t have the cash or borrowing capacity to recapitalize troubled Irish banks, Without an EU rescue, Ireland's banks default, its government defaults, or its citizens face cuts in government services which will make their life miserable.
Had Ireland continued with its own currency, it could have been in the position to print money inorder to recapitalize its banks -- that is exactly what the Treasury and Fed can do for the FDIC, Citigroup, Bank of America, and other financial institutions, or RBI for India.
Printing money would have pushed down the Irish pound against the dollar and other currencies, resulting in some inflation and lower Irish living standards, as bank losses would have spread over the entire economy. However, over several years Ireland's trade balance would have improved, and provided they didn’t take any foolish steps, the Emerald Isle would have worked out of its mess.
Lacking the power to print money, Ireland must accept aid from the ECB and stronger EU governments, but accepting aid seems to create political embarrassment for Irish politicians.Ireland makes the usual baseless claims that it can handle its own problems but euro is weakening against the dollar.
Quick, decisive action seems to become impractical when it is most needed, and fears spread about the euro zone breaking apart. Let us understand this by taking US example of why there is something fundamentally wrong with European Union. Among the 50 states, the U.S. federal government equalizes social spending by transferring tax revenue from rich states to poorer one. France and Germany, like New York, are prospering, but Brussels cannot tax Germany for benefits in Greece in the manner Washington taxes New York to for spending in Mississippi, or other states
Keeping its huge wealth to itself, Germany provides its citizens with employment security, health care and other benefits, portrays itself a model of country of European Union, and scolds Italy or Greece or others for frugality.
Greece, Portugal and others have borrowed thoughtlessly to satisfy their citizens' expectations for benefits on a par with Germany and now face severe troubles. If they still had their own currencies, devaluation of currencies would have significantly helped these countries to come out of these heavy debts .
With each such crisis, probability of infected nations dropping the euro and returning to national currencies increases. Ultimately, this motivates Germany and others strong European nations to come to their aid.
The Treaties of Rome and Maastricht provided Brussels with key powers for building a single market for private goods and services but deny Brussels the taxing, spending and regulatory powers to act as a sovereign government.
The EU should not be printing money,Unless this void is filled.