The tsunami of liquidity that the European Central Bank released in November and February to stave off an incipient 'credit crunch' no longer hides the inability of Member States to pay back their debt. Greece, Portugal and Ireland all remain mired in depression and austerity with no hope of recovery. Yields have begun to rise precipitously again in Spain and Italy.
There is no map for plotting the duration of this crisis: slow, slow, quick, slow. The gathering pace of European leaders towards the cliff edge will become far quicker when the first of the 'too big to bail' countries enters an antechamber of default. For this will be a moment of decision: integration or disintegration!
As Ken Rogoff again lists, the Eurozone does not meet the basic criteria for an optimal currency union: political legitimacy, labour mobility, a lender of last resort for bates and stanks (bank owned states and state owned banks) and a shared debt. When the crisis reaches its full fury, will some or all of the Eurozone leap headfirst into union?
This is unknowable, though all Eurozone leaders have urged greater rather than lesser integration. The current strategy of austerilty through liquidity runs the risk of political rejection after a period of time (depending upon the tolerance of the countries affected). After that, it is a matter of the Eurozone grappling with its strongest flaw: Germany.