I think its fair to say that Europe is terrified that the single currency will collapse and that the results could be catastrophic for the Western World, with the likes of the UK and Germany footing the bill as countries like Greece and Spain default on their debts.
We would like to think that as a society we would learn from past mistakes but it is true to say we should never underestimate our ability to repeat the mistakes of the past.
In the 1870s most major industrial countries joined the gold standard, which used gold as the basis of the monetary system. This meant a fixed exchange rate regime similar to the effect of the Euro in mainlandEurope. This regime encouraged trade and international investment soared. Then came the Great Depression: Farm prices plummeted,Argentinathreatened to default and Baring Brothers of London collapsed!
The similarities between the Euro and the gold standard situation are striking. At the time it was viewed as virtually impossible that a country should leave the gold standard, but it did. In fact, almost every country left the gold standard during the Great Depression.
The question for today is whether the politicians will make the decisions needed before the markets force them to act?