Not surprisingly, workers are leaving the eurozone s crisis countries, but not necessarily for its stronger northern region.

Finally, adverse contagion is extending beyond the 17 countries in the eurozone.

That left individual eurozone members exposed to brutal pressure by financial markets at a time when excessive private debt was turned into unsustainable public debt. Suddenly, the eurozone had become a straightjacket.

In fact, the two instruments may well be complementary in eurozone countries.

Thus, Germany and the eurozone core have increasingly outsourced official financing of the eurozone s distressed members to the ECB.

A few eurozone members financial troubles have become a problem for all.

Indeed, all EU countries not just eurozone members would benefit from such a framework.

No one doubts that Germany and most other eurozone members would prefer the single currency to continue.

Common institutions are needed to ensure that all EU countries interests are protected, and to act as a bridge between eurozone and non eurozone member states.

That is where the eurozone is today. A debt crisis that erupted in Greece, the eurozone s outer periphery, has migrated with a vengeance towards the core, so much so that the survival of the eurozone itself is at stake.

In a debt restructuring, the northern eurozone countries (including France) will see hundreds of billions of euros go up in smoke.

Everyone knows that it can never pay back its debt, most of which is held by the official sector the ECB, eurozone member states, or the International Monetary Fund.

German officials now understand that, given extensive trade and financial links, a disorderly eurozone hurts not just the periphery but the core.

And yet the same policymakers believe that the rest of the world should bail out the eurozone.

The rest of the world led by the eurozone governments would rightly turn their backs.

That is why interest rate spreads in the eurozone periphery are widening again now.

Socializing public debt is already posing a risk to the still stable eurozone countries.

Indeed, all eurozone members are now experiencing weak economic growth, if not recession.

The third stage of the eurozone crisis will arrive when the economic strength of the core is in doubt.

If the euro is to survive, eurozone members must act, while other EU members with various levels of commitment to European integration remain on the fringe.

That left individual eurozone members exposed to brutal pressure by financial markets at a time when excessive private debt was turned into unsustainable public debt.

And now European Council President Herman Van Rompuy, backed by most of the troubled eurozone countries, is again proposing Eurobonds and debt mutualization schemes.

Just ask any of the large international banking groups headquartered in financially stressed eurozone countries.

As a result, the eurozone has become divided into creditors and debtors, with the creditors in charge of economic policy.

This distinction between foreign and domestic debt is particularly important in the context of the euro crisis, because eurozone countries cannot devalue to increase exports if this is required to service foreign debt.

The British economy is contracting. Greece s economy has been shrinking for years.

The Commission is trying to find ways to protect the rights of the non eurozone countries.

This mechanism is not available in a monetary union such as the eurozone.

No one doubts that Germany and most other eurozone members would prefer the single currency to continue. Today s uncertainty concerns whether this preference may be overridden by pressing considerations of national politics, or resentment at the slow pace of reform in certain eurozone countries.

Even if most eurozone countries retain the single currency, it will be because abandoning the euro would be financially painful.

The more the eurozone s ineffective governance is criticized, the greater becomes the euro s importance as a non political currency that represents a secure store of value.

Their exports would become less competitive, and they would encounter heavy competition from the rump eurozone in their home markets.

So a key challenge in resolving the eurozone crisis is to reduce the southern countries debt burdens.

Political upheaval in any of the southern countries would be sufficient to reignite doubts about the eurozone s future.

When a fiscal crisis hit Greece, the financial world suddenly discovered that eurozone members had put themselves in the position of developing countries.

Throughout the crisis, it has been widely assumed at least so far that the eurozone core would remain solid, and would continue to write the checks for the periphery s distressed governments and banks.

Eurozone countries, together with others willing to join the euro in the future (the eurozone plus ), could simply decide to use the legal means already available to increase cooperation.

How could a eurozone supervisor be based outside the eurozone?

It is time for Greece, other eurozone members, and the European Commission to start thinking seriously about that option.

The peripheral countries external deficits are falling rapidly, thus diminishing the need for foreign financing.

A debt crisis that erupted in Greece, the eurozone s outer periphery, has migrated with a vengeance towards the core, so much so that the survival of the eurozone itself is at stake.

The eurozone s current muddle through approach is an unstable disequilibrium kicking the can down the road, and throwing good money after bad, will not work.

In the eurozone s member countries, only fiscal policy is possible at the national level, because the European Central Bank controls monetary policy.

The eurozone now rests on the shaky basis of a confederation of states that are committed both to a monetary union and to retaining their fiscal sovereignty.

More eurozone countries will be forced to restructure their debts, and eventually some will decide to exit the monetary union.