Operation Anschluss

You can tell the European situation is getting really dire when this proposal from Hans-Olaf Henkel gets on the table:

That is why we need a plan “C”: Austria, Finland, Germany and the Netherlands to leave the eurozone and create a new currency leaving the euro where it is. If planned and executed carefully, it could do the trick: a lower valued euro would improve the competitiveness of the remaining countries and stimulate their growth. In contrast, exports out of the “northern” countries would be affected but they would have lower inflation. Some non-euro countries would probably join this monetary union. Depending on performance, a flexible membership between the two unions should be possible.

I don’t really know why Finland would want to be in a currency union with Germany given that their economic cycles strike me as almost surprisingly not-in-sync, but otherwise you could see this as basically a re-creation of the Holy Roman Empire. Especially since monetary union between this hard money bloc and Switzerland would actually make a great deal more sense than union between the hard money countries and Portugal. Someday, rich Northern Italy might succeed in separating from the poorer provinces and might want to sign up, approximating the HR Empire at its greatest extent. We might look back on the past 200 years as a kind of weird interregnum characterized by a series of madcap schemes (by Napoleon, Hitler, Jean-Claude Trichet, etc.) to impose political unity on western Europe.

More seriously, this is actually identical to the more conventional proposals for Spain and Italy to leave the Euro. And the problem is the same — huge bank runs everywhere. Henkel alludes to this, but with very elliptical language (“[s]tabilisation of banks on a national level should replace current European umbrellas. In many cases, this requires temporary bank nationalisation”) designed to obscure the extent and severity of the problem. It’s a distasteful outcome, but many also find the idea of fiscal transfers to Spaniards to be distasteful.