EMU was a political project imposed on unenthusiastic electorates by political leaders in a hurry. However, it was based on some very bad economics and ultimately bad economics leads to bad politics which we are beginning to see.She writes,
There is no example in history when a country has got out of difficulties like those of Greece without devaluation and/or default. If Greece and the other 'Club-Med' countries were to default and leave EMU it would have huge implications for the banking system in Germany and elsewhere, a default by Spain would probably wreck Germany’s which might have to be nationalised. The least bad option would be for the German bloc to leave EMU. Germany’s banks might still have to recapitalised, but it would be less costly doing it directly than it would indirectly by trying to 'rescue' Greece. However there is no way out of this mess that will not be painful for all countries within EMU as well as the wider world.Read the full German version here, and an English translation here.