Euro Zone Is Imperiled by North-South Divide

When economies run into trouble and start slowing down, governments often turn to devaluing their currencies to make exports cheaper, and therefore more competitive.  The U.S. is in effect doing this now, by printing more money and engage in quantitative easing, driving down the value of the U.S. dollar worldwide.  In the Euro zone, however, individual countries do not control the value of the Euro.  The Euro zone makes sense when countries have similar economic profiles, but recently economists have realized that southern European countries like Portugal, Spain and Greece have uncompetitive economies, with high social benefit costs, high budget deficits, and high wages.  Unlike bigger and more competitive economies in France and Germany, however, they lack strict work habits, innovation, and suffer from inefficient labor markets and tax systems.  This divide is causing a crisis in the Euro zone, a crisis some believe may result in the ultimate embarrassment: the abandonment of the Euro experiment altogether.
 
Euro Zone Is Imperiled by North-South Divide - NYTimes.com