It is well known that several highly indebted European governments will face severe refinancing difficulties in 2013 and 2014, and probably default (or more elegantly put “restructuring” of the sovereign debt) for some of them. Hence the call for a “European economic governance” in order to “save the euro”, that is, for fiscal centralization and a quasi-federal management of the zone under the leadership of France and Germany.
Such an organization appeared, however, highly improbable given the general trend towards decentralization, secession, and fragmentation affecting all states of the world in the wake of the information and communication revolution.
Now the high hopes of the French and German governments seem already jeopardized according to Geoffrey T. Smith today's article: “Agenda: Euro Zone Letting Slip A Grand Chance.”
“A couple of months ago, the euro zone appeared to be within sight of a halfway-convincing solution to its debt problems. … the strong would help the weak keep afloat long enough to correct key weaknesses in their economies, in return for permanently ceding a degree of control over their policy making to stop a repeat of the current crisis. Today, it seems a lot further away. … the prospect of disorderly default has become much more realistic. It shores up the liquidity positions of the troubled states marginally without doing anything to address their solvency issues, and financial markets are starting to price in post-2013 restructurings, making it more likely the whole edifice will collapse even earlier.”
Read the whole paper in the Wall Street Journal .