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.

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

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.

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.

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.

The main problem with the recent IMF programmes to countries such as Greece and Portugal has not been one of size or duration but rather one of policy misdiagnosis. 

Financial markets around the world experienced tumultuous swings following Standard & Poor's first-ever downgrade of the U.S. credit rating on Aug. 5. An ongoing European debt crisis and forecasts for sluggish economic growth worldwide are also rattling investors.

With the bursting of the US housing market bubble in 2007-08, praise for Alan Greenspan soon turned into almost universal condemnation. It is all too likely that a similar fate awaits Jean-Claude Trichet as the euro unravels over the next year or two.