“Inasmuch as any country that did not adequately operate sustainable macro and financial policies would suffer greatly from the denouement of policy deficiencies, the euro embodied a strong commitment device. The costs of that policy failure are being felt now.
“But the answer is not to fall back on the more autarchic policies of the 1960s and 1970s, but to try again, try better.
“The markets – gullible as we know they can be – naively assumed that the commitment device would be effective so that they need no longer fear unsustainable policies.
“They know better now, and so do the governments. Next time around will (to this extent) be different: this particular lesson has been learnt.”