The key to understanding the evolution of the euro is to observe and analyse what the Europeans do rather than what they say. They have resolved all of the many crises that have threatened the European integration project throughout its history of more than half a century in ways that have strengthened the institutions and pushed European integration forward. At each key stage of the current crisis, they have in fact done whatever is necessary to avoid collapse.
We have complete confidence that, in the crunch, both Germany and the ECB will pay whatever is necessary to avert disaster. The ultimate political goals of each assure this result.
The problem for the markets is that these central players cannot say that this is what they will do. There are two reasons.
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