Over the past two tumultuous years, Europe has lurched from one emergency rescue plan to the next in its attempts to resolve its debt crisis. Despite the creation of a massive bailout fund, the extension of billions of euros in loans to Greece and others, and the intervention in bond markets by the European Central Bank, the crisis threatens to boil over once again, putting the world at risk of a global economic slowdown. As the possibility of Greece's exit from the euro looms, these extraordinary policies seem little more than half-measures, and many are arguing that the eurozone's only hope for survival is to integrate even further, which would see the bloc issue joint bonds, guarantee euro bank deposits, and transfer some sovereignty over budgets to a central European authority. Are Europe's choices to break up or become a super state?
Yes. A limited federalism is the euro's only hope: Europe's only alternatives are to separate or become a superstate, says The Economist. Past rescue plans, compromised by German Chancellor Angela Merkel's hesitancy and brinkmanship, are "corroding the belief that the euro has a future, which raises the cost of a rescue and hastens the very collapse she says she wants to avoid." The break-up of the euro will surely result in economic calamity, and Germany and the rest of the currency bloc need to make a bigger commitment to the euro "to banish the spectre of a full break-up." This requires a "move towards federalism," since any smaller rescue plan "would be too modest to stem the crisis."
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