This VoxEU post tries to build a consensus narrative about why the Eurozone crisis happened, because you can only effect a cure if you get the diagnosis right. I agree with the post. In particular it makes two crucial points that suggest where reform should be taking place but is not.
First, it points out that the crisis was generated by unsustainable flows of lending from the core to the periphery. This was a combination of irresponsible borrowing and irresponsible lending. It is a classic macroeconomic problem with a classic (partial) remedy: more effective macroprudential and countercyclical fiscal policies. The existing Eurozone fiscal rules, which focus on debt and deficit limits, failed and would fail again because they ignore this problem. Replacing them with rules that allow or mandate effective countercyclical policy should be the focus of policy makers attention, but is off the radar.
Second, the crisis was brought to an end by the ECB becoming a sovereign lender of last resort. That immediately suggests that the crisis could have been far less serious if the OMT policy had been in place much earlier. It raises important issues about how to reinterpret a no bail out policy when OMT is possible, and the nature of any conditionality. Those questions are not at present being addressed by the Eurozone leadership.
Why is it necessary to repeat once again what is a consensus position among most economists? Alas there are powerful political interests within the Eurozone that want to foster an alternative narrative, which sees every country like Greece. This erroneous narrative has already done great damage, creating a second recession from excessive fiscal tightening and insufficient monetary easing across the Eurozone.
It is natural at this point to talk about Germany, and the fact that as a result of low wage increases undercutting Eurozone neighbours before the recession, Germany is not suffering as much from this recession as other countries. But I have often tried to avoid stopping there, and instead to ask whether Germany's strange stance on these macro issues simply reflects this different conjunctural position. I think the answer is no.
I'm increasingly drawn to the view that Germany's stance reflects similar political economy pressures as you will find in other OECD economies: there is no German exceptionalism, but rather that the forces that everywhere are pushing austerity and tighter monetary policy happen for various reasons to be stronger in Germany. From this perspective, this post from Frances Coppola is particularly interesting. Perhaps the problem at the heart of the Eurozone is that economic policy advice in Germany has been effectively captured by employers' interests, and perhaps the interests of banks in particular.