Roger Cohen: Greece, Europe and Alexander Hamilton
[Roger Cohen is a columnist for the New York Times.]
...When the euro entered circulation in 2002, the notion was that the shared currency would propel the European Union toward greater political alignment. It hasn’t happened. On the contrary, resentments have grown, performances diverged. Germany is not keen to throw good money after bad to save debt-ridden Greece.
More than two centuries ago, the newborn United States faced a similar crisis of integration. With the Constitution approved, Alexander Hamilton, as treasury secretary to President George Washington, grappled with proving that the government of the 13 states that now existed on paper could function in practice. The economy was a shambles, beset by debt incurred in the fight for liberty.
In 1790, Hamilton set about establishing the financial credibility of the federal government. Central to his proposals was that the government would assume the debts of the states. This precipitated the “assumption” crisis because different states had different levels of debts and had proved more or less conscientious in paying them off.
James Madison complained that his home state of Virginia and some other Southern states that had paid their wartime debts would be unfairly treated if “having done their duty” they were obliged to “contribute to those states who have not equally done their duty.”
You can just hear those words being uttered today by a German burgher or Finnish techie faced by the financial woes of Portugal, Ireland, Greece and Spain — a group that has acquired the acronym “PIGS.”...
Read entire article at NYT
...When the euro entered circulation in 2002, the notion was that the shared currency would propel the European Union toward greater political alignment. It hasn’t happened. On the contrary, resentments have grown, performances diverged. Germany is not keen to throw good money after bad to save debt-ridden Greece.
More than two centuries ago, the newborn United States faced a similar crisis of integration. With the Constitution approved, Alexander Hamilton, as treasury secretary to President George Washington, grappled with proving that the government of the 13 states that now existed on paper could function in practice. The economy was a shambles, beset by debt incurred in the fight for liberty.
In 1790, Hamilton set about establishing the financial credibility of the federal government. Central to his proposals was that the government would assume the debts of the states. This precipitated the “assumption” crisis because different states had different levels of debts and had proved more or less conscientious in paying them off.
James Madison complained that his home state of Virginia and some other Southern states that had paid their wartime debts would be unfairly treated if “having done their duty” they were obliged to “contribute to those states who have not equally done their duty.”
You can just hear those words being uttered today by a German burgher or Finnish techie faced by the financial woes of Portugal, Ireland, Greece and Spain — a group that has acquired the acronym “PIGS.”...