Europe has come to understand that what is at stake right now is not just the economies of a few member nations, but the future of European Union itself.  The cornerstone of that union is the Euro, the single currency that has made close cooperation even tighter.  But in order to save that currency, there is little that can be done short of the member nations drawing much closer together.  That, and risk killing off the Euro in order to save it.

The growing realization is that they will have to print a lot more Euros to get out of this.

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This morning the Euro crisis moved on from the still unresolved Greek issue to Italy. There is nothing new here except that Italian PM Silvio Berlusconi said he would resign after an austerity package was passed and move the nation ahead into new elections.  How did that happen?

This highlights the critical difference between how the US has been handling the Depression so far, which has been primarily to spend our way out, versus the European belt-tightening austerity being forced on member nations. That difference is stark, but it was not a choice – the Euro system is set up so that it cannot do anything else. It’s that inflexibility that is driving the crisis which has the world running scared.

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