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How to save the Eurozone amarcnn | July 11, 2011 at 10:42 am | Tags: Neil K. Shenai | Categories: Economy, Europe | URL: http://wp.me/p1bJgh-25p

Editor's Note: Neil K. Shenai is an Instructor of International Economics and Ph.D. Candidate at the Johns Hopkins School of Advanced International Studies (SAIS).

by Neil K. Shenai – Special to CNN

Since the European sovereign debt crisis began over sixteen months ago, European leaders have serially underestimated the extent to which the financial crisis threatens the fragile equilibrium of the Eurozone.  In this past week, in the wake of a bold bailout and austerity package inGreece, the markets have turned againstItalyand nowSpain.  Each country faces higher interest rates as borrowers become wary about the solvency of each country.

Sooner or later, European authorities will be forced to choose: They can either agree to a system-wide bailout of all peripheral European countries, guaranteeing their sovereign debt at face value, or risk the dissolution of the Eurozone.  No other solution will suffice. Read more of this post

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