Dimitri Papadimitriou writes in the Huffington Post about two different “endgame” scenarios for the euro:

The collapse of the euro project will break in one of two ways. Most likely, and least desirable, is that nations will leave the euro in a coordinated dissolution which might ideally resemble an amicable divorce. As with most divorces, it would leave all the participants financially worse off. Wealthier countries would be back to the kinds of tariffs, transaction costs, and immobile labor and capital that inspired the euro in the first place; poorer nations could kiss their subsidies, explicit and implicit, good-bye.

Less likely, but more desirable, would be a major economic restructuring leading towards increased European consolidation. The EFSF — the European Financial Stability Facility, which is the rescue fund of the European Central Bank — has access to €440 billion. Thus far, the real beneficiaries of the EU bailouts have been the banks that hold all the debt (you haven’t seen this movie before, have you?).

But with some restructuring and alteration of regulations, that wouldn’t need to be the case. The doomed rescue plans we’re seeing don’t address the central problem: Countries with very different economies are yoked to the same currency. Nations like Greece aren’t positioned to compete with countries that are more productive, like Germany, or have lower production costs, like Latvia. Any workable plan to save the euro has to address those differences.

Papadimitriou goes on to outline what an ideal restructuring might look like.

Previous posts on this issue can be found here, here, and here.