If the Euro € is the answer, what was the question?

When the Euro € was created and introduced in January 1999, the belief was that those European countries who adopted the Euro to replace their national currency would find currency and economic stability; a case of shared strength, where the strong would bolster the weak.

Little did these countries know then that shared strength in the wrong circumstances turns into shared weakness, where the weak spread their weakness to the strong - a clear case of unstable equilibrium my old physics teacher would have said.

First Ireland, then Portugal, followed by Greece, maybe Spain and today, Germany warned Italy that if it did not follow the austerity measures of its government, it too would succumb.  http://www.reuters.com/article/2012/06/13/us-eurozone-idUSBRE85B0FT20120613?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_

Or, in terms of this blog, a clear case of the Law of Unintended Consequences.

Sub Prime Mortgages

From CBS News, August 31, 2007: "Would you like a mortgage that lends you more than the value of your house?

Would you like it structured so that your first payments are extra low?

If the mortgage weren't structured that way, would you be unable to afford the payments?

Are you convinced that real estate prices will continue to rise?

Do you have a poor credit history?

Congratulations if you answered "Yes" to most or all of those questions! You're an ideal target for a subprime mortgage lender.

Of course, there is a downside amid all the fine print, as hundreds of thousands of American consumers are now finding out. Mortgage delinquencies and foreclosures are way up. Dozens of companies that lent money to anyone with a pulse have gone belly up. And suddenly, some economists are starting to worry that the whole mess could send the U.S. economy into recession."

http://www.cbc.ca/news/background/personalfinance/mortgage-meltdown.html

So, in trying to help the poor Americans to climb up the housing ladder, Fannie Mae and other large mortgage lenders no only caused many of them to lose their houses but triggered a world recession that is still with us four plus years on. Such is a prime (pun intended) example of the law of unintended consequences.

Euro Debt

The more the governments of the world try to bolster the Euro, the longer the agony and - in all probability - the bigger the fall, when it (inevitably) happens.

See http://www.bbc.co.uk/news/business-17804218