Mitu Gulati and Eric Posner have written a piece about the European debt crisis for Slate. They think that the various proposed solutions to the debt crisis boil down to gobblydygook. If Gulati and Posner are correct, it’s time to sell your euros.
The debt crisis in Europe presents a big political problem: Wealthy countries, chiefly Germany, must either agree to subsidize poor countries or abandon the euro so that Greece, Ireland, and other countries on the verge of default can reduce their debt payments by devaluing their currencies. The first option is politically explosive; the second is politically catastrophic. To duck this unwelcome choice, heads of government like German Chancellor Angela Merkel and French President Nicolas Sarkozy have proposed a variety of legal mechanisms that sound new and enticing. But these proposals are a smoke screen. The reality is that the necessary legal tools already exist, and they're not being used because they would actually make the crisis worse. . . .