( CNN ) Europe is in the midst of a political and economic crisis that threatens to unravel decades of European integration and derail the world 's recovery from the great recession . To understand this crisis , let 's compare two countries . Country A is a small nation with a long history of tax evasion , government debt defaults and a dysfunctional business and regulatory climate . It allows workers to retire in their 50s , and pays double pensions when they do . It lied about its budget to get into the eurozone . Country B is a large , historically powerful nation with a record of low government debt . Country B even ran budget surpluses , including a 2 % surplus just before the financial crisis hit in 2008 . It entered the eurozone with an honest accounting of its finances . If you guessed that country A is Greece , you are correct . If you believe Greece has caused the crisis in Europe because of its fiscal irresponsibility , then you are safely in the mainstream opinion about the matter . But what do we make of fiscally responsible country B ? Its virtuousness must mean it is weathering the crisis . And it must be Germany , right ? Wrong . Country B is not Germany . Country B is Spain . Far from prospering , Spain is doing terribly . Spain 's unemployment rate is 23.7 % , down from a high of almost 27 % in 2013 . More than a fifth of its workers have been jobless for the last four years . More than half of its young people are out of work and have been for years . There is regularly talk of a lost generation in Spain and Greece . Like Greece , Spain 's investment bubble burst when the financial crisis hit and it had to seek a bailout ( although a much smaller one ) to prevent its domestic banks from collapsing . Spain 's economy also shrank during the crisis and its debt to GDP ratio has shot up dramatically . If Greece and Spain have such wildly different approaches to fiscal prudence , what can explain the crisis they both find themselves in ? The answer is not fiscal virtue . Something else is going on . That something else , in large part , is the euro . Joining the eurozone meant Spain and Greece gave up the power to create money , the power to devalue their currency to restore competitiveness , and the power to set interest rates . These are not trivial concessions , especially in a currency union like the euro where transfers between rich and poor sectors of the economy are limited , strict budget rules deny individual countries the flexibility to react to a crisis , and trade between euro-area nations is severely imbalanced . The inability to set interest rates in line with the economic conditions meant that in the early 2000s , Spain and Greece could n't raise interest rates to cool their over-heating economies . The over-heating was largely caused , by the way , by the frenzied ( and ultimately reckless ) lending in both countries by German and other core European banks . The European Central Bank set interest rates in line with economic conditions in Germany and France that proved too low for Spain and Greece ( and Ireland ) . Read : 25 People to Blame for the Financial Crisis . The over-heating of the Greek and Spanish economies led to inflation and investment bubbles . As those bubbles burst , the banks neared collapse , and their rescue led ultimately to a sovereign debt crisis . The inability of Spain and Greece to print money meant they had to borrow from their partners in Europe or default and be ignominiously tossed out of the EU . Strict budget rules of Eurozone membership also required Spain and Greece to impose austerity measures in the middle of the worst financial crisis since the Great Depression . They were required to raise taxes and cut spending even as unemployment reached astronomical levels . Austerity helped create a depression of historic magnitude in Greece and a severe recession in Spain . The policies also created runaway public debt . Greece 's debt is now 175 % of GDP . Spain 's debt to GDP ratio is 100 % -- a level not seen in Spain in more than 100 years . Because Spain and Greece can not devalue the euro , the only way they can become competitive is through internal devaluation . This means Greece and Spain are in for years of high unemployment , reduced living standards , falling wages and deflation . In other words , massive impoverization . Mario Draghi , head of the European Central Bank , famously said : `` The euro is forever . '' That may or may not be so , but it does n't mean that countries like Greece and Spain should stay in the euro forever . Contrary to popular opinion , this crisis can not be explained away with a moral tale of Greek fiscal irresponsibility . The facts suggest otherwise .
If governments and corporations have such different approaches to fiscal policy , Lisa Tripp wonders why both are in crisis ? Something else is going on , she replies : That something else , in large part , is the problem .