Doug Dachille on CNBC This Morning

I caught a fair amount of Doug Dachille's appearance for, I think, an hour this morning on CNBC.

As always, his comments were lucid, powerful and candid.

Dachille crystallized something which has always bothered me about the creation of the Euro.

In effect, Dachille, more clearly than anyone else whom I've heard on the subject, noted that the EU chose to create a currency, but no centralized taxing authority. Thus, unlike the US, the countries share a currency, and some loose federation policies, but have no effective means to back the Euro as a currency.

It really brings to mind something I said just yesterday to a colleague about Alexander Hamilton. Our first Treasury Secretary was truly brilliant. He had the federal government assume the debts of the states and created the dollar, thus seamlessly unifying the nation fiscally and monetarily.

Pity the Eurozone. As Dachille so succinctly put it, they can't take unified measures to support the Euro because there is no federal taxing power. Everything has to be a country-by-country vote to fund actions in support of their shared currency.

This addresses what I had misgivings about so many years ago, i.e., that the Euro countries weren't sufficiently unified in both fiscal and monetary policies. As such, at some point, their lack of federal authority to coordinate the monetary and fiscal aspects of the Euro would come back to bite them. In effect, Germany, with the most stable currency and strongest economy of the EU, had not ceded its fiscal authority to the EU.

You might not be able to clearly define how the monetary and fiscal aspects of a nation's currency interact, but you know it's an important phenomenon. In the Eurozone, it's now clear they just don't have that linkage in a manner that global investors trust or believe.