The political crisis, which in the end is far more of a threat to the euro than the financial markets, is slowly assembling a critical mass. There is a chance of a socialist government in France, Greece is soon to vote for a new government, in Ireland voters are refusing to pay the 100 euro levy, the Dutch government has fallen and everywhere opposition to austerity gathers.
In time pressure will build on Germany, but so long as everyone depends upon German cash to stay afloat, Germany will stand firm. It is not yet possible to determine the point at which German public opinion will decide the cost of keeping the euro is not worth their money and the majority, rather than the current sizeable minority, decide life under the deutschmark was better. Yet in this scenario lies the most logical solution to the problem long term.
At present it is unthinkable, but this blog is happy to think it. If Germany pulled out of the euro, all the struggling debt ridden, growth zero countries followed Greece in a partial default and the euro massively devalued to a level appropriate for their real economies, life for all the populations, now ground down by austerity,would begin to improve again.
Because, at the end of it all, the problem with the euro is not the spendthrift laxity of its southern members, but the efficiency of German industry and the financial rigour of its people. The fall of the Dutch government, north European and a vocal supporter of the German position, proves the point.
Food for thought?