This ignores the key flaws in the Maastricht regime of the EMU and the true causes of the crisis. One original sin was to put no one in charge of minding the store of the giant integrated euro economy. No demand management was foreseen in good times, no lender of last resort in bad. Predictably, the Euroland economy has proved prone to protracted domestic demand stagnation and conspicuous reliance on exports for its meager growth, while crisis management has been by trial and error; and errors with no end it would seem. The second original sin was to forget what fifty years of European monetary cooperation were all about, namely to forestall the risk of beggar-thy-neighbor currency devaluation. The euro provided the coronation of that very endeavor in the sense that exchange rates disappeared with national currencies. But this only meant that under the EMU trends in national unit labor costs have taken on the role of determining intra-union competitiveness positions alone. The golden rule of monetary union therefore requires that national unit labor cost trends stay aligned with the common inflation rate that union members have committed to - when they didn't.

It is a well-known fact that Germany's unit labor cost trend departed from the 2 percent stability norm, settling for zero under the euro regime. As Germany turned űber-competitive, its euro partners lost competitiveness just the way they would have in case of 20 percent deutschmark devaluation in pre-EMU times. Alas, the EMU has actually complicated matters as diverging unit labor cost trends essentially dealt the currency union an asymmetric shock that undermined the "one-size-fits-all" monetary policy. With wage repression and mindless austerity suffocating German domestic demand, the ECB's stance became far too tight for the former "sick man of the euro." By contrast, set to suit the average of the euro aggregate, the ECB's stance became far too easy for other euro members, nourishing property market bubbles and growing current account imbalances as a result. Prior to the crisis, Germany's soaring current account surplus was concentrated in Europe, about two thirds with its euro partners. Lending flows from Germany were instrumental in allowing intra-area divergences to persist and imbalances to build up. Herein rests the source of Germany's exposure to solvency problems in the euro periphery.

While these basic facts should be well-known by now, their official reading pins the blame solely on debtor countries. Somehow everyone but Germany lost competitiveness. And somehow fiscal profligacy was the main villain in all this. A sober reading of these facts suggests requirements for crisis resolution that squarely defy the strategy currently pursued by the euro authorities.