Eurozone Recovery Temporary
Re: This euro zone ‘recovery’ feels temporary, Nouriel Roubini, Oct. 01 2013
If the European Union is to be saved, there must either be fiscal transfers from richer regions to poorer ones (as we have in Canada through equalization payments), or individual countries under duress must leave the Euro and recover the ability to depreciate their currencies. The latter course may be more politically probable, preserving the union but slowing down European integration. There is consolation in remembering, however, that Rome wasn't built in a day.
As I have noted previously, there are only two ways for the Eurozone to proceed in providing for growth and stability:
1. What I would consider to be the preferred way, given the cultural and economic differences across member states, is for the Eurozone to be broken up in an orderly way and currency sovereignty restored at the member state level.......
2. In lieu of the preferred option, and given the seeming (irrational) resistance across the EA17 to abandoning the common currency, the only alternative viable path is for the Eurozone to create a true federation, where the member states become states of the Eurozone along the lines that California or New South Wales are states of the US and Australia, respectively