Only exacerbated because the ECB is not a central bank in the traditional sense. Traditionally, the central bank (or a related institution) would just print up money to make up for the shortfall. The logic of modern politics leads inevitably to the printing press.
Now, the only way the Germans would have agreed to an ECB would have been a bank at least as strong (and printing-averse) as the Bundesbank. So the so-called 'stability pact' was signed in order to placate them (max 3% of GDP deficits and max 60% debt to GDP ratio, working toward zero deficits at some point).
What happened was the Euro states continued or increased their spending, producing deficits even during the great boom years right before the collapse. Today, the Stability Pact is a dead letter and members (the PIIGS in particular) are trapped without an ability to print themselves out of trouble. Of course, the ECB has been issuing a lot of new money, but just to rescue the major banks, the governments are on their own.
This isn't to say that it's a good idea to print oneself out of debt, but governments find it the easiest thing to do. The crisis would not exist if expenses could have been scaled down as easily as they have been increased. It's better in the end to have a strong currency and balanced budgets, but balanced without low expenditures, not high taxes.
Now, the only way the Germans would have agreed to an ECB would have been a bank at least as strong (and printing-averse) as the Bundesbank. So the so-called 'stability pact' was signed in order to placate them (max 3% of GDP deficits and max 60% debt to GDP ratio, working toward zero deficits at some point).
What happened was the Euro states continued or increased their spending, producing deficits even during the great boom years right before the collapse. Today, the Stability Pact is a dead letter and members (the PIIGS in particular) are trapped without an ability to print themselves out of trouble. Of course, the ECB has been issuing a lot of new money, but just to rescue the major banks, the governments are on their own.
This isn't to say that it's a good idea to print oneself out of debt, but governments find it the easiest thing to do. The crisis would not exist if expenses could have been scaled down as easily as they have been increased. It's better in the end to have a strong currency and balanced budgets, but balanced without low expenditures, not high taxes.