Okay, so it's a little over the top. And yet . . . this euro doesn't seem to be working out, does it?
Obviously, I've been skeptical for a long while. But of course, it was always possible that I was missing something, so I hesitated to make an excessively confident prediction.
At this point, though, the roads to salvation seem pretty rocky. A eurobond might do the trick--but a really credible eurobond, with serious guarantees for large portions of the outstanding sovereign debt, would require a treaty modification that they don't have time to do.
Can they somehow finesse the legal obstacles? Treasury did somewhat in the dark days of 2008--but only somewhat. Former Treasury officials now tell me that there were avenues they wanted to explore, but couldn't because they were legally non-starters.
If they can finesse the obstacles, do they want to? Germany doesn't seem so hot on the idea.
And even if they want to, would it work? Even France has come under attack in the last few days. Germany cannot guarantee the rest of the eurozone's debt by itself.
Besides, as we've seen, even under the gun, it's hard for peripheral countries to exercise fiscal discipline at the behest of the Germans. Eurobonds might not solve the problem so much as delay it until France and Germany get sick of the costs, or another, even deeper crisis rips apart those guarantees.
What's left? The ECB? Maybe they won't act until there really is no other choice. Or maybe they don't think it's such a good idea. Which is it? Your guess is as good as mine.
At this point, the panic has got up quite a head of steam. It's not clear to me that there's any action which would be timely and credible enough to stop the run on European financial markets that already seems to be in progress.
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