The shared currency of the Euro was supposed to be part of a new European fabric uniting the continent in economic prosperity and liberal-democratic values. It has turned out to be an economic straitjacket.

Not only is the European Monetary Union (or Eurozone) stagnant, but many of its member nations are still in full-blown depression. If nothing changes soon, this depression will very likely sum to worse than the Great Depression of the 1930s — as the investment bank Natixis calculated, Spain will not reach 2007 levels of unemployment for 25 years.

That's the context in which we should view the recent elections to the European Parliament, where extreme right-wing parties picked up seats almost everywhere, and especially in France and Britain. The unelected, anti-democratic elites of the European project are making such a mockery of their own values that they have resurrected fascism as a legitimate political view. For the people of the Eurozone who still have a voice in such things, the question is whether the Euro is worth saving. If elites cannot be convinced to relax their austerity fixation, or further integrative policy cannot be managed, the answer may be no.

The problem with the Eurozone is that the nations thereof ceded their monetary sovereignty to a central bureaucracy over which they have no democratic influence, and which has no policy responsibility other than to keep inflation low. In the United States, by contrast, we have a fiscal union (a single tax-collecting and spending authority) and a banking union, in addition to a single currency. This greatly helps cushion shocks and ameliorate the conditions of depressed regions.

The Eurozone has neither of these things, but their economic elite has chosen much worse policy than one would have predicted from optimal currency area theory. Who are we talking about here? Mostly the top leadership of the European Central Bank, the European Commission, and their political handlers in the inflation-crazed German government. The International Monetary Fund, on the other hand, which while it has been part of the dread "Troika" enforcing austerity across the continent, has become increasingly alarmed at the overall failures of Eurozone policy. This recent report by Kevin O'Rourke in an IMF quarterly puts the situation in dramatically stark terms:

First, crisis management since 2010 has been shockingly poor, which raises the question of whether it is sensible for any country, especially a small one, to place itself at the mercy of decision makers in Brussels, Frankfurt, or Berlin. It is not just a question of hard-money ideology on the part of key players, although that is destructive enough. It is a question of outright incompetence…

There are serious legal, political, and ethical questions that must be asked about how the ECB has behaved during this crisis —for example, the 2010 threat that if Dublin did not repay private creditors of private banks, the ECB would effectively blow up the Irish banking system (or, if you prefer, force Ireland out of the euro area) is not legitimate for an unelected central banker in Frankfurt to try to influence inherently political debates in countries like Italy or Spain, because the central banker is both unelected and in Frankfurt. [Finance and Development]

The evolution of the IMF — which used to be, basically, the leg-breakers of international capital — has been a grim indication of just how jaw-droppingly awful Eurozone economic policy has been. It's as if Pete Peterson joined the Socialist Party. Since the crisis of 2008, the Eurozone has been in one long and grim process of defining failure downward.

That an anti-Europe backlash should take root in France and the UK, both nations which are doing well compared to wrecked Spain and Greece, is perhaps not so surprising. Democracy is dead in the Eurozone periphery in many important respects. It's now widely understood that these nations will not be allowed to deviate from preferred German/ECB economic policy; attempts otherwise will be met with a coup d'etat. France, by contrast, is still enfranchised, and the UK isn't even on the Euro at all.

That's only part of the story, of course. Attachment to the Euro has proven unbelievably persistent, even in Greece. That combination of apocalyptically bad but hard-to-understand effects make poorly-integrated international currency areas, in my opinion, one of the worst ideas in history.

In any case, as O'Rourke points out, the question now is whether the Euro is even worth saving at all. So far Eurozone elites have managed to muddle through on just about the worst of all possible courses, one which just barely prevents total collapse, but ensures a generation or more of utter economic misery in the periphery. is becoming increasingly clear that a meaningful banking union, let alone a fiscal union or a safe euro area asset, is not coming anytime soon. For years economists have argued that Europe must make up its mind: move in a more federal direction, as seems required by the logic of a single currency, or move backward?...The longer this crisis continues, the greater the anti-European political backlash will be, and understandably so: waiting will not help the federalists. We should give the new German government a few months to surprise us all, and when it doesn't, draw the logical conclusion. With forward movement excluded, retreat from the EMU may become both inevitable and desirable. [Finance and Development]