Wolfgang Münchau on why the euro will survive

In his FT column, Wolfgang Münchau noted that the euro critics who predicted the immediate demise of the eurozone had been proven wrong by last week's events. George Papandreou reshuffled the cabinet, and Angela Merkel capitulated on the private-sector involvement debate, which has been the biggest obstacle to an agreement on a second Greek loan package. The events of last week produced a political economy lesson about the eurozone - events are pushing the eurozone towards further economic and political integration. Greece will eventually default (or be foregiven its debts) - of this there can be no doubt - but Greece will default into the EFSF/ESM/bilateral programmes. Three finance options will then be available, monetisation, fiscal transfer or a eurozone bond. The ECB will reject the former, the member states will reject the second. The eurozone bond will emerge as the only realistic way out. There may still be a major accident on this path, but it will not happen this month, and probably not this year either.