The following article puts some historical perspective to the current issues in Europe. The premise is that the best way for the weaker economies such as Greece, Portugal, and Ireland to be able to recover is through deflating their own currency. The parallel is that countries that left the gold standard after World War 1 didn’t face the same economic turmoil that affected the countries that took longer to abandon the standard.
I believe that the two possible long term solutions are either:
1) The dissolution of the Euro, particularly for the weaker countries as it is the only way that they can get to a competitive balance with the northern economies.
2) The adoption of a fiscal union to go along with the monetary union, similar to what occurred in the United States when Alexander Hamilton’s plan for the Federal Government to assume the individual states war debts, in exchange for placating Jefferson and Madison with putting the capital city in Virginia. While this type of Union seems unlikely when you look at two thousand years of wars, and fervent nationalism between the different parties involved, for Europe to be at its most competitive capacity a fully unified Europe is a necessity. The economic system can certainly function if it went back to the status quo prior to the EU, but a competitive balance between the major economic powers, would be more favorable than a hegemony, or even worse a dual system of East versus West.
http://news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=137204.xml&part=1