The linked column from today’s NY Times, title as above, http://economix.blogs.nytimes.com/2012/06/21/the-end-of-the-euro-is-not-about-austerity/?ref=business, was written by Simon Johnson. Mr. Johnson is a former Chief Economist at the IMF and is currently a Professor at MIT’s Sloan School of Management.
The column points-out that, as the various Nations joined the EuroZone, they linked their individual currencies to the common EURO at a fixed exchange rate, based on the previous value of at the the time they joined the EuroZone. Further, they promised never to change that linkage. That is not at all realistic!
The problem is that that linkage assumed that all (now) seventeen Countries’ Economies would grow at the same rate. Obviously, that was a fallacy that is now coming home to roost. It withdrew the ability of countries to adjust their own currencies–to devalue (for poor growth) or re-value (for strong performance) based on their respective Economies.