The EU Commission is deeply concerned that Italy is under pressure to spend frivolously because of the upcoming elections. The EU is now scrutinizing Italy’s huge sovereign debt. Because of the vast size of the Italian economy, the high level of total debt is a major concern for the Eurozone as a whole. The EU Commission sent a letter to the Italian government warning them not to deviate from the course of fiscal consolidation before the parliamentary elections in the spring.
Instead of creating simply a trade union, the idea that a single currency would save the day has seriously distorted reality. This idea of surrendering sovereignty by each member state to maintain a single currency is the worst possible design. Had the EU consolidated the debts and thereby created a federal EU debt, then each member state would have been responsible for themselves. In the USA, we have 50 states issuing debt in dollars, yet they have no part in the dollar. Had Europe consolidated the debts and drew the line in the sand at that moment, then states would be able to issue whatever debt the market would accept without impacting the single currency as is the case in the USA. The failure to consolidate the debts means Brussels imposes austerity upon member states simply because they failed completely to comprehend the nature of the system they were creating. This is the entire reason the Eurozone is cracking apart.
