While the world is finally witnessing the fundamental flaws with the EU —
namely, a unified currency system combined with a dispersed political
framework (meaning financial and political decisions cannot be
adequately coordinated) — the problems were greatly exacerbated by the
reduction in liquidity and the risk aversion of investors that followed
in the wake of the U.S. subprime industry meltdown.
When the bubble burst in the small European nations, they, unlike America, could not just print more money. They had to go to the EU central bank, hat in hand, and seek a bailout from the stronger economies in Europe such as Germany and England. It quickly became a political fiasco. The European central bank imposed drastic austerity measures on the populations of the PIGS — measures that have proven to be politically disastrous and caused conflict and unrest even in England, one of the wealthiest countries in the EU.