The yammering in Brussels is getting close to epic proportions
With attempts in Athens to form a government after last week's election looking increasingly doomed, European leaders abandoned their taboo on talking about the possibility that Greece might have to leave the euroWithout political integration into a federal single Union the Euro was pretty much doomed to fail. National governments and their people flinched at forming a single entity, my opinion is still that if they couldn't form a single entity then having a single currency was pointless. Instead of the Euro there was the option of a controlled currency exchange rate to prevent speculation.
What we have now instead of a democratic union is an autocratic one, democracy is being trampled as the financial giants try to save their metaphorical bacon.
The reality is that if you couldn't form a single political entity democratically then you really couldn't form a union monetarily either something was bound to give. The fact of the matter is that the financial crisis stress tested the Euro, and it broke, there is no point in trying to bandage it by trampling democracy into the dust.
What we have now is both political and economic fragility and the more that democracy is kicked to the curb, the worse it will get. We have seen the rise of extreme nationalist parties because of this, they in turn blame the easiest targets of all the immigrants. It is not the immigrants that have caused any of the problems, it is not even the fault of individual countries. The fact of the matter is that people feel powerless to change their fate and are prevented from doing so by the plutocrats. Sacrificing whole nations and their people on the alter of market stability can only incubate resentment.
It started with the holy grail of "Austerity" without incentive, it has moved on to anti democratic strategies, it will all end in tears. There are voices being raised that stimulus is required and in France we voted one of those into power, however as things stand now, it will be too little too late. It is now time to to organize the break up of the Eurozone and to try and avoid total chaos.
The Euro was a financial pact rather than a democratic one, and this was always its fundamental and in the end fatal flaw.
Krugman's projections [I link this article rather than his NYT post for obvious pay-wall reasons]
. [First, we see a] Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.