A "United States of Europe" or Full Exit from the Euro?

The euro is now facing an existential choice: What was once deemed the fantasy of a few extreme euro-skeptics-namely the potential disintegration of the euro-has now become respectable mainstream opinion. The current institutional arrangements are surviving only by virtue of the European Central Bank's decision to backstop the bonds of the periphery countries now facing an insolvency crisis. In effect, the European Central Bank has become the political arbiter for fiscal decisions made by each of the eurozone's national governments. This is politically unsustainable. Ultimately, the choice is between the restoration of national currencies and the reestablishment of full fiscal sovereignty in the respective nation states of the European Monetary Union or the creation of a supranational fiscal authority, a "United States of Europe."