Euro-Zone...Cracking?

And what the heck does that mean?

...Spain is the line it is said that German taxpayers will not cross. If they balked at assisting Spain and a German government did not participate then the euro starts to break up. It is hard to see such an eventuality having anything less than horrendous implications, including default, chaos and widespread penury.

Can the crisis be stopped short of Madrid, the euro saved and terrible consequences avoided?

It will likely require much closer integration of the euro-zone countries that goes beyond what is currently on the table. Full-scale political integration is what is being contemplated but it is unclear whether, if Germany formally demands it, it will be viable or capable of gathering support in individual countries with their fractious and soon-to-be-frightened electorates.

But it is worth remembering that it is not just individual economies and a currency that are under pressure. Several big ideas are being stress tested here.

First, the bailing out and unlimited guaranteeing of banks—a major factor in the Irish end of the crisis. The orthodoxy that established itself after the collapse of Lehman Brothers stipulated that the inter-connectedness of financial institutions made it unthinkable that major players should be allowed to fail. That was the logic of the panic of late 2008 and early 2009.

Angela Merkel, the German Chancellor, says that this has gone too far, and that eventually bond holders and institutions must take a share of the pain. But the result of her comments on the matter was an acceleration of the crisis in Ireland and eventually a giant loan to bail out the Irish banks.

It seems that once you start bailing out banks it is difficult to stop, and if you accept the theory of inter-connectedness then is there anything large and financial you won't rescue to buy a bit of stability, even if it is for half a day?...

Sometimes big ideas fail. And history suggests that right up until the moment that they do, very large numbers of people will maintain that failure is unthinkable.

Perhaps that is not about to happen in terms of European togetherness, and the crisis will slow down with order restored. But what is holding together the euro zone together today? It is now no longer the dreams of an elite determined to construct a rival to the U.S. that could parley on equal terms with the emerging powers. Today it is being held together by simple fear of the alternative.