It is time for Spain and the victim states to seize the initiative. They cannot force Germany, Holland, Finland and Austria to swallow eurobonds, debt-pooling and fiscal union, nor should they try since that implies the evisceration of their own democracies.

What they can do is use their majority votes on the ECB’s governing council to force a change in monetary policy. Germany has two votes out of 23, with a hard core of seven or eight at most. The Greco-Latin bloc can force a showdown. If Germany storms out of monetary union in protest, that would be an excellent solution.

The Latins would keep the euro – until the storm had passed – allowing them to uphold their euro debt contracts. There would be less risk of sovereign defaults since these countries would enjoy a pro-growth shock from monetary stimulus and a weaker Latin euro against the Chinese yuan, the D-mark, and the guilder.

The currency misalignment eating away at EMU would be cured instantly. There might even be a sharemarket rally once the boil was lanced. It would certainly be a better outcome than the current course of deflationary troika regimes and loan packages for economies trapped with the wrong exchange rate, destined to end with one country after another being thrown out of EMU in a chain reaction.

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