Whats the matter with Europe? (part 2)

(continued from below)
So now the Eurozone is faced with a situation where all members share one monetary policy, set by the ECB in Frankfurt, but NOT one economic performance. German unemployment peaked at about 8% in June of 2009, and fell below 7% by the summer of 2011. Over that same summer, the ECB raised its target interest rate three times, tripiling it from 0.5% to 1.5%. In other words, the EUROPEAN central bank has acted as if it is the GERMAN central bank and nothing more. With the rest of the continent still mired in unemployment, the issuing authority of the euro declared the slump over and raised rates.

At the time of this writing, the Italian unemployment rate was 8.3%. The Irish unemployment rate was 14.2%. The Portuguese unemployment rate was 12.5%. The Spanish unemployment rate was a whopping 22.6%. And the folks at the ECB could not care less, because the German unemployment rate is at comfortable 5.8%. Mission accomplished, they say.

And that leads us to the current looming sovereign debt crisis.

For it is this patent disregard on the part of the ECB for the economic success of the periphery countries that has made the creditors of those countries relucant to hold their sovereign debt at anything less than punative interest rates. In order for investors to lend money to a government on reasonable terms (i.e. low interest rates), they must feel confident that the issuing government will have the capacity (i.e. tax revenues) to pay them principle + interest when the debt comes to maturity. But what the ECB has demonstrated is that Spain does not have a central bank that will stand by its economy. Italy does not have a central bank that will stand by its economy. Ireland does not have a central bank that will stand by its economy. As a result, the economic prospects of these nations is proportionally diminished in the evaluating eyes of the international bond market. And it's completely unecessary. (continued)