"Ummm, you know that Free Trade Agreement we signed with the US and Mexico, a while back? And you know we said NAFTA was just a free trade agreement — nothing more? Ummm, well, it turns out we were wrong. Because of NAFTA, if Canada, Mexico, and the US don't now join together into one big United States of North America, the result will be the total economic collapse of all three countries. So, we are just going to have to join our three countries together and make the best of it. Sorry about that. But we can't turn back the clock. And there really is no alternative now. OK?"

Any sort of Canadian nationalist would go ballistic if I were to say those words. Especially if they knew I was right.

Like all analogies, it doesn't work exactly. But that's the best I can come up with. Just replace "North America" with "Eurozone"; and "free trade agreement" with "common currency".

If that is how the United States of the Euro gets created, I think it would be the most hated country on earth. Hated by its own people.

In good times, without a solvency and liquidity crisis of sovereigns and banks, it would be possible to dismantle a currency union in an orderly fashion. Difficult, but possible. These are not good times for the Eurozone.

The European Central Bank can't function as an effective lender of last resort without some form of political union. All proposals for saving the Euro amount to political union in a shotgun wedding because she didn't take the pill like she said she did. (Maybe that's a better metaphor).

And the alternative is a disorderly breakup of the Eurozone, after banks and sovereigns have already defaulted.

Those are two very ugly alternatives. And I don't even think the first would work. A country formed in such circumstances would be so resented by its own people I think it would be ungovernable. So I think a disorderly breakup of the Eurozone is what will happen. And that will be very ugly too. And not just for the Eurozone.

This is the sort of thing that can happen when you don't understand monetary theory well enough. Even those of us who thought the Euro was a bad idea didn't really know it was such a bad idea. If we had really known it would end this way, we could have presented overwhelming evidence in a convincing enough manner to have been able to persuade everyone else it would end this way. And we couldn't do that. So we didn't really know it.

There are two big economic problems facing the world economy right now. The problem in the US is solvable. The problem in the Eurozone isn't. It can't get where it wants to be from here.

God it's depressing.