Timing

Dear reader,

it is important to understand that timing is of the essence when it comes to solving the crisis of the eurozone.

If there is an immediate crisis situation ("fire") one is well advised not to discuss to long about the causes nor about what happens when to clean up the rescue operation itself. (e.g.water damage done by extinguishing a fire)

So perhaps it is not only worth looking into which group could do what job in current crisis situation, but also keep in mind that different stages need different approaches:

So there are short term measures needed, 


Some steps to be taken in 1-3 years (control liquidity, inflation)


and then long term goals must be observed.

The author here never made a secret out of his believes that the EU and its common currency project should be rooted in a functioning market economy and the Euro should have made border crossing payments easier and cheaper (by saving the costs of currency exchanges). But this goal isn't strictly tied to the existence of a single currency for all: Single Euro Payments Area

The Euro is a currency which was intended to improve European & International trade, foreign travel and therefore to contribute to growth. Convergence of economies was needed and a strict follow up the rules of Maastricht (deficit & total amount of state debt to GDP).  
Unfortunately some did not stick to that simple but promising fact, but instead assigned an almost mystical objective to the single currency to form a 'European identity' no matter how the economies of the member states performed or better how the governments of those member states would stick to the rules outlined already in 1992. As we all know it worked for a while but failed the first big 'stress test' which swept over the Atlantic to the European continent.

As there is a current and urgent need to act swiftly, decisively and convincingly (to calm the financial markets) and the author here agrees to the recipes given by Mr Krugman and others to stabilize the EZ in the short term, he disagrees strongly to an endless 'spending spree' in the long run. In the long run the European continent can only survive with a competitive industry, concentration on new products, new (emerging) markets besides using the benefits of a single market within the EU. Using the benefits of massively reduced bills for energy imports is another promising contributor.

Mr Krugman and 'the left' are right when it comes to solving immediate problems and Mrs Merkel and the 'German orthodoxy' are also right, when it comes to long term objectives of structural reforms towards lean and efficient state structures, the promotion of market economy and strengthening of the private sector. The reduction of state debt is a good cause and so is the principle not to spend more than the economy is able to deliver in tax revenues. In the long run 'printing, lending and spending' cannot work and the whole system would reach a point in the future where there will be a Giga or Tera implosion.
So austerity is necessary but not at once and certainly not in the middle of crisis ranging anywhere between serious recession and depression in most EZ countries. And not everywhere geographically from Portugal to Scandinavia and from Ireland to Greece and not at once trying to reduce state and private debt.
To forget however about the long term goals is indeed a recipe for disaster too originating from 'moral hazard' not to reform at all and let the 'rich uncle' (Germany) pay the bills or let the ECB print new money when the old one has just vanished once again.

So in order to reach the long term goals some objectives to reduce debt levels during economic times of economic growth and prosperity must be casted into law now, but in order to survive one should not apply artificial restrictions to the EZ in times of crisis.