I am not sure that the Euro will survive, nor the Eurozone itself.
Economists Simon Johnson and Peter Boone write that it is nearly inevitable that the Eurozone is over, and it is just a matter of time for people to admit to it. Greece, of course, will be the first to go. Their point seems to be that the European Central Bank, the International Monetary Fund, and the European Commission keep finding ways to loan money to Greece and the other weak periphery European countries, but all that is happening is that the eventual need for the breakup gets pushed down the road with the consequences of that breakup becoming bigger as time passes. They foresee capital flight from the sovereign banks and governments of the periphery Euro countries.
I'm not a financial guy, and I think people in the financial industries continue to believe that the European Project can be rescued by more and more clever ways to get loans to the failing financial institutions and the failing sovereign nations.
But I wonder.
It looks to me like the eventual outcome is going to have to be one of two things: either the Eurozone breaks up and an idealistic notion - that was unrealistic - reluctantly fails, or the Eurozone unites into some form of a European United States. Both outcomes seem impossible now, but I think the forces pushing Europe into one of those outcomes are too strong to be changed with clever ways to transfer more and more money from Germany to the failing nations and banks.
One currency without one fiscal policy is proving to be disastrous.
If the Eurozone is to unite fiscally, it might be able to do so by having a central fiscal authority govern all of the Eurozone nations without needing to have all of Europe unite under one government, but how nations with centuries of sovereignty with their own cultures, histories, and languages voluntarily turn over their sovereignty to a central power is very hard to imagine. Necessity, however, may force the issue in the end.
If you look at the United States, we faced many of the same issues after the Revolutionary War. The cultures of each sovereign state was very different from the rest, but we managed to make it work. Indeed, the cultures across the various parts of the U.S. are still radically different - compare Texas and South Carolina to Massachusetts and New York. But we manage to make it work.
Or at least we have up until now. Time for some prayers for harmony, hope, understanding, negotiation, and compromise, on both sides of the Atlantic.