Wow. Paul Krugman almost had a Eureka! moment:
A number of commenters have pointed out that unemployment has been falling in Germany over the past few months. Um, yes — but not in the eurozone as a whole. And that is what we’re talking about here, aren’t we? Or is European monetary and fiscal policy to be run solely based on how things are going in one country?
Um, that is exactly what we're talking about here, Professor, where "that" refers to "Who controls monetary and fiscal policy in Europe". That's what all of this is about. Up until now, monetary policy was controlled by one country -- Germany -- and fiscal policy was supposed be to restricted by the Maastricht criteria. But since the Euro isn't an optimal currency area and poorer countries in southern Europe didn't control monetary policy, they had to use rely more on fiscal policy to satisfy domestic demands, which left them all in debt and effectively broke Maastricht. This is what all of this is about.
Somehow Krugman still misses it, tho:
The point is that what amounts to a regional development within an ailing European economy doesn’t signify much.
It does when that region is the one that controls monetary policy for the rest of the Europe.
Does Krugman really not know what this is about? What has he been talking about for the past few months?