The Eurozone Works Fine As Long As There Is No Recession

This article argues that the eurozone was created during the optimistic period that some call "The Great Moderation". During this period downturns in the business cycle were moderate and economies quickly recovered. The magic of the market worked so well that the need for monetary policy, fiscal policy and exchange rate policy were no longer necessary. In other words, the eurozone would work very well as long as there were no recession. The absence of these macroeconomic tools for sovereign states in the eurozone makes recovery from recession more difficult and this exacerbates the debt to GDP ratios that have made it more difficult many states to fund their debt at affordable rates.