Future of the European Union
The Future of the EU
William D. Smith
ABUS 383
The European Union is a union of 27 member countries, that predominately operates in Europe. It had predecessors, however under the current name, it was founded in 1993 after the Maastricht Treaty. Since its founding, the EU has adopted many policies and regulations to theoretically make its members better off, however the current crisis does not reflect much positivity to this. So, how could the Europeans possibly overcome this current debt crisis? Well there are many theories, and for every theory there seems to be an opposing theory against it. First off, I believe that the EU started going down the wrong path with the adoption of the Euro. There were countries in the Eurozone with different credit rates getting abnormally low interest rates. Also, let us not forget that the Euro was a stronger form of currency than some of the countries had formerly possessed. Common sense then tell us, that credit terms are better, there is an economic outburst, and that outburst leads to investor willing to make high-risk gambles and spend a lot of money. Then, when everything calms down, the debts still remain. So theoretically, if needed, one could go to the bank to get a loan to pay off a serious debt. However what happens when money spenders try to withdraw from their now broken banks? So, that leads to the question of possibly fixing the broken banks. After all, if a bank is borrowing money to pay off its debts and give loans, it’s digging itself into a hole that is not easily climbed out of. So how do we fix this? Some argue a bailout. This is a poor decision, look at how the bailout scheme worked for us here in America, it didn’t. A bailout is bad for the economy because it does not fix an economic crisis it just prolongs it. A bailout will interrupt the process of reallocation of resources, which will hurt in the long run. This reallocation problem also incarnates another problem, being that
William D. Smith
ABUS 383
The European Union is a union of 27 member countries, that predominately operates in Europe. It had predecessors, however under the current name, it was founded in 1993 after the Maastricht Treaty. Since its founding, the EU has adopted many policies and regulations to theoretically make its members better off, however the current crisis does not reflect much positivity to this. So, how could the Europeans possibly overcome this current debt crisis? Well there are many theories, and for every theory there seems to be an opposing theory against it. First off, I believe that the EU started going down the wrong path with the adoption of the Euro. There were countries in the Eurozone with different credit rates getting abnormally low interest rates. Also, let us not forget that the Euro was a stronger form of currency than some of the countries had formerly possessed. Common sense then tell us, that credit terms are better, there is an economic outburst, and that outburst leads to investor willing to make high-risk gambles and spend a lot of money. Then, when everything calms down, the debts still remain. So theoretically, if needed, one could go to the bank to get a loan to pay off a serious debt. However what happens when money spenders try to withdraw from their now broken banks? So, that leads to the question of possibly fixing the broken banks. After all, if a bank is borrowing money to pay off its debts and give loans, it’s digging itself into a hole that is not easily climbed out of. So how do we fix this? Some argue a bailout. This is a poor decision, look at how the bailout scheme worked for us here in America, it didn’t. A bailout is bad for the economy because it does not fix an economic crisis it just prolongs it. A bailout will interrupt the process of reallocation of resources, which will hurt in the long run. This reallocation problem also incarnates another problem, being that