"Europe must prevent Greece from becoming an out-and-out catastrophe and make sure that the same fiscal 'remedy' is not applied to other weak economies" -- Franziska Brantner
Europe is a powerhouse of Western culture and science. It possesses an economy with an annual Gross Domestic Product of over sixteen trillion dollars.1 Europe’s global economic connections are worth billions to developing countries and even the United States of America.2 Regrettably for the global economy, the European Union may collapse very soon, the cost of allowing incompetent politicians to run an economy on bad policy.3 A fiscal union is necessary to prevent the destruction of the Eurozone.
The whole objective of the initiation of the European Union was to create a European economy, a greater European stability and society, all with a greater altruistic attitude.4 This may all have been for naught if the Europeans cannot adopt a preservative tendency. All sides of the table agree that a solution must be met. After all, to do nothing could risk the contagion of the primarily Greek, Portuguese, Spanish, and Italian crises to more internationally relevant economies, like France and Germany.5 However, the four most affected countries, Greece, Portugal, Italy, and Spain; known collectively under an umbrella pejorative “the PIGS”, already combine for 24.5% of the entire European economy.6 This means a loss of these states from the economy could already amount to sizeable damages. In spite of the potential for such a negative outcome, the sovereigns simply cannot agree to what this solution might look like, and all the solutions thus proposed have appeared to be unsatisfactory.7
Debt is a long term problem and accordingly, it makes sense to employ a long-term solution. Two of the most noteworthy solutions that have already been passed into law have included the establishment of the European Financial Stability Facility (“EFSF”) and the European Financial Stabilization Mechanism (“EFSM”).8 9 These were both essentially instruments by which the European Union could itself become a lender to its member states. A similar proposed, but not enacted, solution was suggested called the European Stability Mechanism, a permanent system put in place to replace the fleeting EFSF and EFSM.10 Another proposed solution, popularized by Jakob von Weizsäcker and Jacques Delpla, are what are called “Eurobonds”.11 A so-called Eurobond is where investors loan some money to the European Union at a certain interest rate (among the notable opponents, Germany starkly disagreed with this policy, remarking that it is frivolous to make borrowing easier for countries in which the very cause of the problem was too much borrowing)12. Additionally, the European Central Bank (“ECB”) has also intervened in various ways.13 The aforementioned methods include, most prominently, a pledge to pursue all avenues necessary to help the debt-ridden countries meet their fiscal objectives for this year...