But I was especially drawn to “Whither the Euro?” by Kevin Hjortshøj O’Rourke, because he finds himself driven to contemplating whether the euro will survive. He concludes:

The demise of the euro would be a major crisis, no doubt about it. We shouldn’t wish for it. But if a crisis is inevitable then it is best to get on with it, while centrists and Europhiles are still in charge. Whichever way we jump, we have to do so democratically, and there is no sense in waiting forever. If the euro is eventually abandoned, my prediction is that historians 50 years from now will wonder how it ever came to be introduced in the first place.

…

But in the euro-zone, these adjustments are either not-yet-practical or impossible. With the euro as a common currency, exchange rate changes are out. Movement of workers across national borders is not that large, which is why unemployment can be 5% in Germany and more than 25% in Spain and Greece. Wages are often “sticky downward,” as economists say, meaning that it is unusual for wages to decline substantially  in nominal terms. The EU central government has a relatively small budget and no mandate to redistribute from higher-income to lower-income areas. Without any adjustment, the outcome is that certain countries have depressed economies with high unemployment and slow or negative growth, and no near-term way out.

Sure, one can propose various steps that in time might work. But for all such proposals, O’Rourke lays two unpleasantly real facts on the table.

First, crisis management since 2010 has been shockingly poor, which raises the question of whether it is sensible for any country, especially a small one, to place itself at the mercy of decision makers in Brussels, Frankfurt, or Berlin. … Second, it is becoming increasingly clear that a meaningful banking union, let alone a fiscal union or a safe euro area asset, is not coming anytime soon.

For years economists have argued that Europe must make up its mind: move in a more federal direction, as seems required by the logic of a single currency, or move backward? It is now 2014: at what stage do we conclude that Europe has indeed made up its mind, and that a deeper union is off the table? The longer this crisis continues, the greater the anti-European political backlash will be, and understandably so: waiting will not help the federalists. We should give the new German government a few months to surprise us all, and when it doesn’t, draw the logical conclusion. With forward movement excluded, retreat from the EMU may become both inevitable and desirable.

Vir: Tim Taylor, Conversable economist