The Economist gets it right

The Economist explains:
That leaves the third question: the euro. For all the talk of the euro failing to survive this sovereign-debt crisis, it should struggle through. Despite the troubles on its periphery, the public debt of the euro zone as a whole is not notably high by rich-country standards. The real problems are the absence of a credible plan to deal with errant countries (as the Germans have recognised), the structural imbalances between Germany and the less competitive southern members and, most of all, the miserable growth prospects for those poorer, weaker southerners, made worse by their fiscal retrenchment. Denied the possibility of devaluation, slow-growing countries like Portugal and now Spain should be looking for structural reforms that can reduce their labour costs, enhance enterprise, stimulate competition and regain competitiveness.

Ironically Ireland looks more likely to find that growth than the Mediterranean countries. None of that excuses the mess it has made of its banking system. But the real question for Europe is whether it wants a slow succession of Greeces and Irelands—or whether it is ready to move beyond government rescues and focus on growth.
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Comment: There is a lot to do. The balancing act exists in being daring and careful at the same time. What is urgently needed is a new (sound!) global monetary system.