Euro Collapse?

It is not impossible, though it is unlikely. If the Euro-zone is to survive, however, as a coherent, rather than a troubled, currency it has to meet the criticism of every major commentator. It is impossible to have a currency without a government and all economies in the zone must operate within the same fiscal policy. This requires significant surrender of sovereignty. If the democratic institutions of the zone give the people the right to choose who makes the decisions, then all will, in the end be well.

At present the governance of Europe is among the most peculiar of all the systems currently operating across the world. It is never quite clear who is in charge of what or whether their authority is accepted and understood. The democratic link with much of the structure is stretched, leaving many of the populations of  the nation states in the dark. This provides the illusion of sovereignty to members, but as Ireland has woken up to discover to its dismay, it is an illusion. 

Thus, given that we expect the Euro to survive, we must assume that proper governance will be installed. That may mean that some will want to leave. We cannot yet prophesy how it will all turn out.  We do know what is spooking the markets. Suddenly the size of the sovereign, banking and personal debts of the vulnerable countries is throwing up two questions.

Can such debt mountains ever be paid off? Will the affected populations accept the levels of austerity necessary to make that likely over a long, perhaps very long, term?  Nobody knows the answer to either of these key questions. Markets hate uncertainty. Investors walk away or charge the earth. This is the heart of the current crisis.