Chillin'Competition

With all the fuzz about the Greek financial tragedy, I cannot help but drawing comparisons with what happened last year in  the private sector. The most glaring similarities are:

• Not unlike the subprime crisis, this crisis stems from problems of asymetrical information and moral hazard, with Greece lying on the real status of its finances, and fooling its European Monetary Union partners;
• We here have a country that has become “too big too fail“, and Member States have to rescue it;
• Massive State aids are now provided. Those aids fall short of the prohibition of the TFEU. Yet, like aids granted last year to banks, this rescue scheme distorts competition between disciplined and careless governments. Of course, some may argue that Europe is not an area where Member States compete against each other,  but where countries  act jointly, in a spirit of solidarity. Well, as sad as this may sound, this is plain untrue. Each Member State individually defines its  budget seeking to maximize domestic wealth. In addition, the competence over the main economic  issues lies at the national level (social security, pensions, military, research and education, etc.);
• What’s missing in  the European Monetary Union is a credible regulatory framework, with tough enforcement mechanisms.

Another puzzling thing:  some of you may have heard that regionalism in on the rise in Belgium. A handful of influential Dutch-speaking politicians – who come from the wealthy northern part of Belgium –  no longer want to subsidize the poor, French-speaking southern region. Now here’s something which puzzles me: how can those guys can reconcile this with the billions of € they are ready to lend to Greece (and more generally with their alleged pledge to build a stronger Europe)?