Hope springs eternal among policy makers in Europe’s beleaguered periphery. At five minutes to midnight in Athens, and with a bank run having started in Madrid, these policy makers cling to the forlorn hope that somehow Germany is going to relent on its strong opposition to euro bonds.

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.

The following is a letter to the editor in response to an April 8 op-ed in The Financial Times on the possibility of countries opting to leave the eurozone.

When the G8 major economies convened at Camp David last weekend, the continuing crisis of the euro, common currency of 17 European Union (EU) members, dominated the economic discussions. The agonies of Greece, badly divided in recent parliamentary elections, and forced to vote again on 17 June, were at the forefront.

After five years of wrenching economic recession, one has to wonder what it will take for Greece to cut itself loose from the failed IMF and EU policies that have reduced the country to its present terrible economic pass.

AEI's John Makin examines the consequences of German deflationary policies and Greece's probable exit from the eurozone in the latest Economic Outlook.

Greece's economic and political unraveling could not be coming at a worse moment for President Obama. The crisis has the potential to send shock waves not simply through Europe but also through global financial markets on the very eve of the U.S. presidential election.

Suggesting that an orderly Greek exit from the euro should be manageable because Greece constitutes only 2 per cent of the overall eurozone economy is all too reminiscent of the policy complacency that preceded the Lehman bankruptcy in September 2008.