First a bonus track-
Doing The Unthinkable
Terence Burnham is dead wrong. Krugman actually does prefer Option B (“devalue through a new Spanish currency”)-
What are Spain’s alternatives here? Well, if they still had their currency, their own currency, the answer would be devalue, let the peseta drop, Spanish exports would become a lot more competitive, they’d be well on their way to recovery. They don’t have their own currency, so people are saying: Well, you have to do all this stuff to stay within the Euro. At some point you say: Well, you know if your answer to our problem is just ever more suffering, ever more you know… 25 percent, 50 percent youth unemployment. If that’s your notion of a solution, then maybe although it would be a very terrible thing to have the Euro breakup, maybe that’s better than what we’re doing. So that’s becoming a real possibility now.