I have learned everything I know about how the world works from your articles, and they (and you) are MUCH appreciated.

“Perhaps the greatest irony of a “euro (crisis) made in Germany” is that failure to prevent asymmetric shocks potentially arising from wage divergences, amounting to nothing else but following through the original thrust of monetary cooperation in Europe directed at forestalling competitive devaluations, has much increased the required scope for fiscal union in ensuring the euro’s future survival. There is a non-negligible risk that the political process may not produce timely decisions before ECB liquidity runs dry.”

Here is more on “The Euro Debt Crisis and Germany’s Euro Trilemma”, just published by Joerg Bibow as Working Paper No. 721, Levy Economics Institute of Bard College:
Research Associate Joerg Bibow argues that the eurozone crisis is not primarily a “sovereign debt crisis” but rather a twin banking and balance-of-payments crisis. Intra-area competitiveness and current account imbalances, and the corresponding debt flows that such imbalances give rise to, are at the heart of the matter, and they ultimately go back to competitive wage deflation on Germany’s part since the late 1990s. Germany faces a trilemma of its own making and must make a critical choice, since it cannot have perpetual export surpluses, a no transfer / no bailout monetary union, and a “clean,” independent central bank. Austerity, says Bibow, has made the situation worse by adding a growth crisis to the potpourri of internal stresses that threaten the euro’s survival.
http://www.levyinstitute.org/pubs/wp_721.pdf

I mean long and grueling until the final decision is taken.

Please, could you explain why you see that euro exit would be a long and grueling process? In my opinion if the exchange to a “neopeseta” was to be done, it had to be done overnigth! If you meant to say that the effects would linger… of course! the effects would be permanent! Nevertheless, I believe that the euro exit would have a sharp and sudden effect, not a long grueling one as you seem to believe. The long and grueling path is the one we are following hopelessly rigth now.

I would argue that there is a fourth way that can help to reduce de current account imbalance. Spain could use fiscal policy to drive changes in consumptiom that have a primary effect on imported goods, for instance: fossil fuels. Increasing taxes on gasoline (sharply) would reduce gasoline imports. Other taxes on energy consumption would also help. For instance taxes that could reduce electricity consumptiom in summer (too many refrigerators indeed). Although gas-guzzlers pay higher taxes than more efficient cars, there is room for increasing them more.

These days, the balance of goods of Spain would be neutral if we excluded energy goods (fossil fuel imports). Actually the problem these days is the balance of rents which is deteriorating a lot.

What is amusing – in a grimly ironic sort of way – is that I and my fellow Austrians have been saying for the past four years that the losses had already been irrevocably been incurred DURING THE BOOM and that the proper response to the crisis was for both debtors and creditors to recognise this as soon as possible, to take their lumps, to roll up their sleeves, and to get on with rebuilding their wealth, aided by the removal of as many microeconomic impediments as possible and absent ANY and ALL macroeconomic fiscal/monetary conjuring tricks, designed as they were merely to camouflage the bitter truth and to perpetuate the illusion that all was not as bad as feared.

The dominant, Keynes-influenced mindset among the Nomenklatura (yes, Mr Krugman, this means you), of course found this to be utterly unpalatable (principally, one suspects, because it did not leave its proponents with much of a role in explaining or enacting such a grown-up policy).

Having seen our no-nonsense approach initially parodied as being ‘Austerian’ – and having endured the insinuation that we were the new Brunings, all set to usher in the next incarnation of the German Reich by mindlessly refusing to implement what are palpably Hitlerian (or, at least, Schachtian) economic policies – we see that the truth is at last beginning to percolate through the semi-permeable mental well-springs of the punditocracy.

It may well be that, as Mr Pettis makes plain here, the prevailing political orthodoxy is such that its practitioners had to exhaust all other courses before beginning to countenance this, the only choice to offer any hope of relief, but, if we are to limit the cost to no more than the already appalling, post-Lehman reckoning of trillions of wasted dollars and 100s of millions of blighted lives and livelihoods, we can at least move from its belated contemplation to its rapid and resolute implementation with as little further delay as possible!