I am confident that nobody important wants to end the Euro. As long as that remains the case, the problems will be resolved eventually. We may have to go through a couple of iterations of stupid first, though.

Predictions are always hard, particularly about the future. But for what it's worth I see roughly the following events going forward:

1. The ECB/IMF interventions blow up in Greece and Ireland (and maybe Portugal and Spain).

2. A new round of IMF-style interventions is attempted, under the management of the EFSF, with weaker conditionalities.

3. The EFSF blows up.

4. The EFSF is either reincarnated or recapitalised.

5. Iterate from step 2) until the conditionalities have been watered down to the point where the only penalty for having the EFSF fix prices in your sovereign bonds is a loss of reputation.

6. The EFSF (or a later incarnation) begins issuing non-state-specific €-bonds.

7. The EFSF is rolled into either the Commission or the ECB. The problem is now patched over in a way that enables the € to function until and unless we get serious about federal industrial and fiscal policy.

How much this is going to hurt depends on how many iterations it takes for Bruxelles to realise that it's really rather stupid to keep doing the same thing that just blew up in your face.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.