Fear that shadows the euro
Once again this week the euro is set to unsettle markets and unnerve politicians. Public sector workers in Greece will strike, so giving an indication as to whether last week's austerity programme can be implemented. Pressure will grow on Germany in particular and possibly France to rescue Greece from its debt.
Saving the eurozone will no doubt edge its way onto the agenda at this week's informal summit on jobs and growth in Brussels. The IMF stands in the wings, ready and willing to administer its harsh medicine. Some or all of this may happen.
It may be that a short-term solution is found and the markets steady. Maybe the EU bends its rules and Greece is given guarantees and loans. Maybe Germany rides to the rescue, demanding sacrifices from the Greeks. "Greece has to realise that when you break rules over a long period of time, you have to pay a high price," said Wolfgang Schaeuble, Germany's finance minister.
Maybe it will fall to the Germans to crack the whip of austerity. Maybe will move in and be less squeamish than the EU in demanding the Greeks slash their public sector.
Whatever the fix, it seems unlikely that Greece will be allowed to default. The fear would be of contagion; that investors who had bought Portuguese or Spanish bonds would panic and start selling fearing further losses beyond Greece. So the expectation has to be that Greece won't be allowed to fail.
But none of that is where the greatest fear lies. For when this immediate crisis is over there will be a legacy. Firstly, damage has been done. The euro has been weakened. Secondly, it has revealed flaws that threaten its future.
The fear is rooted in the simple analysis of economists like Gerard Lyons, of Standard Chartered: "For monetary union to survive, it has to become political union." And that is a stick of dynamite.
You now hear plenty of voices saying: "You can't have a single currency when national economies are so different or where you don't have common fiscal policies." As Mr Lyons observed: "Monetary union needs fiscal union".
When the euro was launched critics said you can't have a currency used by 16 countries where "one size fits all". The past 10 years seemed to prove the critics wrong but now those early doubts are returning.
And there lies the rub. For national governments retain control over economic and fiscal policy. They could not surrender those powers without massive debate. Any idea of reviving the idea of political union would be hugely controversial and a crisis for the EU. The Union has just ended eight years of argument about institutions. "We now have the structures for the 21st Century," I have been repeatedly told.
But say the conclusion from this crisis is that the euro is fatally flawed; that it might survive this storm but will surely be holed next time around. Then, inevitably, the arguments will start as to whether the eurozone needs the equivalent of a single treasury.
In the Nouriel Roubini, who made his reputation predicting the credit crunch, made this observation: That unless the EU worked out a way of dealing with individual states' problems then doubts about the euro's sustainability will return time and again. And that's the fear that lies behind the current turmoil.
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