Trying to make sense of the economic crisis in Europe and I wanted to put a few things together: First, Paul Krugman has been harping about how the Euro is a major problem because Greece and Spain can’t simply devalue their currency. But, second, I heard an interview with David Harvey who said that the economic crisis in California is as big, if not bigger than some of the ones we are seeing in Europe. OK, but then why isn’t the Dollar a problem for California? I finally got a tantalizing answer to that question in an interview with a hedge fund manager on Doug Henwood’s Beyond the News [episode not up yet]. I forget his name, but he suggested that while there are no legal barriers to labor mobility in Europe, cultural and linguistic barriers make it hard for labor to move from low productivity regions to high productivity regions. That, seems, in part, to suggest why the common currency is less of a problem in the US than it is in Europe. But I’m not sure if this point really addresses the issue raised in #2? And also, do linguistic and cultural differences really explain Europe? I know a heck of a lot of Eastern Europeans moved West in search of work… So still something that I need to understand better. Comments welcome.