Now is decision time for the euro
With the Greek financial crisis continuing to worsen, it is becoming increasingly clear that the entire single currency project has reached a crossroads. With the seemingly inevitable Greek debt default confronting the ECB's suicidal determination to prevent write-downs, something must give.
Regardless of what happens at this week's emergency meeting of eurozone finance ministers or at next weekend's EU leaders' summit, it is already obvious things cannot go on like this. Ever since the extent of the Greek financial crisis began to emerge 18 months ago, the eurozone has lurched from one crisis to the next. Instead of either implementing the reforms required to make the euro work or walking away from the single currency project altogether, Europe's leaders have instead opted for a series of ad hoc "solutions", including the May 2010 Greek bailout, the November 2010 Irish bailout, and the May 2011 Portuguese bailout.
Unfortunately, as none of these measures have addressed the underlying issues -- the massive loss of competitiveness suffered by the eurozone periphery versus its core, and the huge overhang of debt in the peripheral eurozone countries -- they haven't worked. Now, just 13 months after its first bailout, Greece is back looking for more.