Time to buy euros?
Strange but true: the euro is worth almost as much today as it was a month ago, despite all the dramas in Greece and Italy. It's actually about 3% up against the dollar since the start of the year.
You might see that as a vote of confidence, that somehow the single currency will get through this intact. You'd be wrong.
In fact, anyone who thinks that there will still be 17 members in the eurozone in a few years' time should be expecting the value of the currency to go down. Ironically, it's only if you think the eurozone might be about to break apart that it makes good sense to buy.
You might think I've gone entirely mad. But think about it. Within the eurozone, the only remotely plausible recovery path for countries like Greece or Spain involves a much weaker exchange rate - and, incidentally, higher inflation in Germany. (See this past blog for more.)
This is not really negotiable: if there is no path to recovery for these countries, either Germany has to bail them out indefinitely or the eurozone breaks apart.
As we know, Germany doesn't want any of the above. But faced with choosing one, you could see why many Germans would be tempted to get shot of Greece, and possibly some of the others as well.
That, however, would be deeply short-sighted - and not just for the obvious and very important reason that messy exits from the single currency could push Europe into a prolonged depression.
Another, very important reason is that a smaller, "hard core" eurozone would inevitably see its currency go up. That is something that German exporters would not like to see at all.
Germany's current account surplus last year was nearly 6% of GDP. The Netherlands had an even larger surplus. The average current account deficit of the four periphery economies now under pressure was 7% of national income in 2010.
As Graham Turner of GFC Economics has noted, Germany's exports accounted for an astonishing 50% of GDP in the second quarter of 2011. A population that is so dependent on foreign trade for its economic growth might want to think long and hard before talking up the merits of a "hard" single currency zone, where every country is just like them.
Strong money, no growth?
A "stronger" eurozone, applying the German definition of strong, would inevitably have a much stronger currency to match. As Mr Turner reminds us, that hasn't worked out so well for that other ageing export champion - Japan.
A soaring yen helped prolong Japan's battle with deflation and stagnation in the 1990s. They have been struggling with the same problem since 2008, despite record low interest rates.
Today, the foreign exchange markets would like nothing more than another big surplus country whose currency they could buy.
If the Deutschemark were still around, traders would have been piling into it just like they have been piling into the Swiss franc. That might have cost the German economy rather more than bailing out Greece. That could be Germany's future, if it allows the eurozone to get a little smaller.
The German chancellor knows all this very well.
For the record, I don't think either Chancellor Merkel or President Sarkozy have been talking about a break-up of the eurozone, though that is how some have interpreted their recent comments. They are trying to talk up the prospect of fiscal union, because that is what the financial markets need to hear.
The idea is that every country who wants to stay in the single currency needs to accept it's going to be a tighter, more intrusive club of countries than it was before. The promise comes now, to calm markets. The messy business of rewriting the treaties can come later.
That's still about the future. As I said in my piece for the six o'clock news, Chancellor Merkel had less to say yesterday about how to resolve the crisis that's happening now. In a later post, I'll assess the short-term options for rescuing Italy and keeping the single currency on track.
For now, let me just go back to where I began. Countries like Italy need a strong euro like a hole in the head. So, if the exchange rate has been remarkably stable, in recent months, you shouldn't necessarily read that as a signal that the euro will get through this intact.
When I interviewed George Soros the other day, he said this wasn't a time to be selling euros. We all took that to mean he thought politicians would do what it took to keep all of the current members of the euro inside the club. In fact, it could mean exactly the opposite.