Greece is in urgent need of clear thinking. The only reason the country has not long since defaulted on its debts is that the European Central Bank continues to provide funds to the Greek central bank through its emergency liquidity assistance (ELA) scheme. The Greek central bank, in turn, lends money to the country’s commercial banks, which lend it to Greek citizens and foreign creditors. The problem is that both groups of borrowers have been transferring large sums of money to other countries.
Europe today is a continent of borders. The second-smallest continent in the world has more than 50 distinct, sovereign nation-states. Many of these are part of the European Union. At the core of the EU project is an effort to reduce the power and significance of these borders without actually abolishing them — in theory, an achievable goal. But history is not kind to theoretical solutions.