Colonized by bankers

This New York Times article comparing Wales and Greece is very interesting. One country is in a currency union that works, and one isn't. Paul Krugman has a quibble with the intellectual origins of the need for fiscal transfers in a currency union, but there's another point worth mentioning. Let's suppose there was a country in a currency union and that this country had a number of banks headquartered there, banks which engaged in reckless lending, grew far beyond a size that the country could fund or sustain, and indeed beyond a size that the country could bail out when things go wrong. In a proper currency union, the cost would be shared among all the members.

Now that's not Wales, which is why it's not the best example for studying the deficiencies of the Eurozone. Instead, it's Scotland. Because Edinburgh is the home of both Royal Bank of Scotland and Bank of Scotland, which form the core operations of the two banking groups that got into so much trouble in 2008. But the UK taxpayer -- not the Scottish taxpayer -- bore most of the cost of cleaning them up. On the other hand, a former member of the sterling area let its home-grown banks grow into budget-busting disasters. That would be the Republic of Ireland, but the Eurozone has stuck the Irish taxpayer with the entire bill. That, as much as the need for fiscal transfers to cope with structural decline -- as in Wales -- is absent in the Eurozone.