Failed Discipline, Failed Reforms And Grexit: Why The Euro Failed

Failed Discipline, Failed Reforms And Grexit: Why The Euro Failed | Zero Hedge:
There is no substitute for the discipline of a market that cannot be manipulated by political elites.

It's not that difficult to understand why the euro is doomed to fail. 

Given its structure, there is no other possible outcome but failure. 

Greece's exit (Grexit) will simply be the first manifestation of the inevitable structural failure of the euro. 

To understand why this is so, we have to start with two forms of discipline: the market and the state.
The market disciplines its participants by discovering the price of not just goods and services but of currencies and the potential risks generated by fiscal and trade imbalances.

 ...The other form of structural discipline is imposed by the state (government in all its forms, including central banks). 
A typical example is the state legislature imposes a cap on state borrowing, i.e. the state is not allowed to borrow more than 3% of expenses annually.

 We all know what happens to these kinds of state-imposed discipline: they are ignored, bypassed, watered down or gutted. 
Why is this so? 
The reason is that all political systems, regardless of their ideology, are influenced by powerful elites and vested interests. 

When some political cap stands in the way of enriching or protecting a politically powerful elite or vested interest, the cap is quickly reduced to a PR play. 

This is the fundamental flaw in state fiscal discipline: it is always a political construct and thus contingent on what benefits powerful elites and constituencies...

Read on!