“1) “Fragmentation of the euro zone,” in which the 17 member nations would go their own way, which he said would be “incredibly disruptive not just for Europe but also for the global economy.”
2) “Full fiscal union,” in which the nations adopt uniform financial reforms that would be more political in nature.
3) A “middle ground” in which a “smaller but stronger euro zone” emerges where as many as three countries default on their debt and exit the EU.”
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He forgot option #4: Print money like crazy. I suppose he assumes Option #2 includes that, but it’s not explicit.
Agreed Cain’
creating currency is actually the only option, fiscal union cannot save Europe from eventually imploding.
It has a current account deficit, it has currently zero ability to create new currency (congress creates new currency in the US nearly every year, by deficit spending), and that means that Europe itself has an enormously negative net-supply of Euros inside itself. (see sectoral balances). That isn’t sustainable.