Angela Merkel warned that Germany could abandon the euro

"If this is the sort of club the euro is becoming, perhaps Germany should leave,"

Altough the Euro area would lose the corner stone, and the best example of how economic rigor leads to well-grounded and stable growth, I think it is one of the best ideas I have recently heard from any politician in Europe.

First of all, the current situation of Europe is unsustainable:

• With the current spreads, the PIiGS can not bear such a cost of the debt indefinitely,
• The longer it takes to change their current situation, the more they'll have dig in the whole, and
• The greater the economic differences between some leading countries (DE, NE, ...) and the tail of the animal (GR, IRE, PT, and SP)

With this scenario, my favorite solution is the so called 'United States of Europe', which would imply to go beyond the monetary union, to achieve a fiscal union (which Spain really needs to get rid of half of its political class).

The second solution is to go thorough some kind of disintegration in the Euro Club.

Much has been said about the countries that should leave the euro and the costs embedded.

'PIG'-countries are all small , that greatly benefit from a common currency, and would find expensive the logistics to leave the Euro.

On the other hand, Germany has the size to bear its own currency much better, and there are fewer advantages for them to be in the euro than to smaller countries (e.g.: benelux)

One solution could read like this:

PIIGS remain in the Euro, so that their liabilities do not appreciate due to the change in currency.

And the list of healthy countries, create their own currency and kick the can.

The banks will suffer equally because their liabilities will be denominated in a 'foreign currency' that will lose value, but ... the ECB can open a window of opportunity for them to exit.

The results are similar in both arrangements: an array of countries much more similar to each other than the current mix in the Eur. Because the third solution, to do nothing, to leave the differences between the core and the periphery to increase, provoking mutual nettle when default events occur is (IMO) the worse one.

Trichet made a good step forward calling for a fiscal union in the Euro the last month, but he needs to be piercing: no politian will be willilng to give up its 'kingdom', and action is needed asap.