2. The Eurozone Crisis: A Near-Perfect Case of Mismanagement

The Eurozone crisis occurred because the institutional setup was imperfect. The wrong concept of fiscal discipline, the inability of the ECB to act as lender of last resort, absence of a banking union, allowed some public debts to increase dangerously; the lack of comprehension of the crisis by political leaders led to contagion and a deep depression. Some of the institutional flaws have been dealt with, but partially so. Existing institutions have been unable to design timely and adequate policy responses. The Commission has limited itself to imposing pro-cyclical austerity policies. The “Community method” has given way to inter-governmentalism. The dramatic economic and social impact of the crisis has left a disastrous perception of Europe, with potentially momentous costs in the long run.