Attempts at austerity and deleveraging in Europe have converted an economic problem into a political dilemma, with leftist governments rising against Germany's austerity-laced rescue packages. Germany now faces a tough economic decision that will involve choosing between a breakup of the current euro system and a movement toward a common fiscal policy in Europe.

Europe’s proposed financial firewall around Spain and Italy will prove any more effective in protecting those countries from another market onslaught than was the Maginot line in protecting France. The very design of the proposed firewall appears to be basically flawed in dealing with a renewed loss of market confidence in the euro’s long-run sustainability.

Whether through bailout fatigue, austerity fatigue, or a full-blown bank run, Greece’s exit from the euro is now inevitable.

A potential European banking crisis would spill over to the US financial system, which has very close links to the European banking system.

An early exit from the euro now would be preferable to Greece going through another few years of wrenching recession only to find later that it did not have the ability to tolerate the rigors of continued euro membership.

With each passing day, Greece's economic and political malaise deepens despite one massive International Monetary Fund-European Union bailout package after another to keep that country afloat.

Desmond Lachman's response to Daniel Gros's article, "Portugal is Delaying the Pain it Knows is Inevitable."

There will be a further significant intensification of the Euro-zone debt crisis in the months immediately ahead that could result in the Euro's unraveling within the next twelve months. This crisis poses serious risk to the US economic recovery.