CAMBRIDGE The world economy faces considerable uncertainty in the short term. Will the eurozone manage to sort out its problems and avert a breakup?

And, while the cloud over the eurozone may be the largest to burst, it is not the only one threatening the global economy. Batten down the hatches.

But the starting point for debate must be realism about the nature and severity of the problems facing the eurozone. If eurozone policy assumes that fixing the banks will fix the economy, the next ten years in Europe could look like the 1990s in Japan.

While Greece s eurozone partners may be able to carry it for decades this way, and even to bail out Spain, the system would surely collapse under the weight of a larger economy. And such an economy France is in serious jeopardy.

Scotching the Eurozone

Demokratisasi di Eurozone

Optimizing the Eurozone

Poland s Eurozone Tests

Rebalancing the Eurozone

Sustaining the Unsustainable Eurozone

Alexander Hamilton s Eurozone Tour

Down with the Eurozone

London vs. the Eurozone

But these countries real economies would benefit from a furlough from the eurozone. Depreciation inside the eurozone in the form of deflation, on the other hand, would drive large parts of the real economy into excessive debt, because only the value of assets, not that of bank debts, would decline.

The Government the Eurozone Deserves

Eurozone Budgets Under the Spotlight

Growing Up in the Eurozone

Decision Time for the Eurozone

Golden Rules for the Eurozone

Judgment Day for the Eurozone

The Emerging Economies Eurozone Crisis

Signs of Life in the Eurozone

Will Vladimir Putin Bolster the Eurozone?

A Standby Program for the Eurozone

A Survival Strategy for the Eurozone

A Breach in the Eurozone Dike

Sustainable growth can be achieved only if Italy s economy regains its competitiveness, and within the eurozone there is only one way to accomplish this by reducing the prices of its goods relative to those of its eurozone competitors. What Italy managed in the past by devaluing the lira must now be emulated through so called real depreciation.

A New Approach to Eurozone Sovereign Debt

Back to the Brink for the Eurozone?

The False Promise of a Eurozone Budget

Then there is Germany, which holds the key to the integrity and unity of the eurozone. So far, Chancellor Angela Merkel has been largely successful in insulating the German economy from the turmoil elsewhere in Europe.

If the eurozone maintained its investment rate at the level of the pre boom years, there would soon be much more capital relative to the size of the economy. One might be tempted to say So what?

With some members inside of the eurozone, and others remaining outside of it, and with disparate economic interests and monetary and fiscal traditions even within the eurozone, agreement is difficult. That sets the stage for three broad scenarios, each with implications for the European and global economy, the financial and banking system, and relations between the member states and EU institutions.

Though QE might work in a debtor economy with a flexible financial system like the US, it could backfire in a creditor economy with a conservative financial system. This, rather than the fear that the ECB might end up buying the bonds of untrustworthy governments, is the real argument against QE in the eurozone.

The euro crisis has given rise to a consensus that, in order to function effectively, the eurozone must pursue further integration. Specific proposals include a designated eurozone budget, increased fiscal policy coordination among members, and a eurozone finance minister.

Whenever someone proposes turning the eurozone into a transfer union, as France s economy minister, Emmanuel Macron, recently did, the presumption is that Germany will carry everyone else on its shoulders. But why should only Germany have that responsibility?

The main reason the forecasts were so wrong is that those making them chronically underestimated the impact of government spending on the economy especially when interest rates are near zero. And yet the clear failure of austerity to restart the economy in Greece or the rest of the eurozone has not caused policymakers to rethink their approach.

For the past 18 months or so, the UK has had Europe s fastest growing economy, and at times has even outpaced the United States. The unemployment rate, now 5.6 , has fallen to less than half that of the eurozone.

Yields on Spanish and Italian bonds, which had risen to unsustainable heights over fears of a eurozone breakup, fell sharply after the announcement. They have remained at lower levels ever since, despite little visible improvement in the European economy.

Under this program, creditor countries would write off Greece s debts, on the condition that the country left the eurozone voluntarily. This would give Greece the opportunity to start afresh from outside the monetary union it could restructure its economy without outside interference, and could be ready to re enter the eurozone at a later point under new conditions this time without false statistical pretenses or unrealistic expectations.

NEW YORK Dark, lowering financial and economic clouds are, it seems, rolling in from every direction the eurozone, the United States, China, and elsewhere. Indeed, the global economy in 2013 could be a very difficult environment in which to find shelter.

Indeed, the market signal is clear At present, there is no shortage of funding available in most of the EU. The countries on the eurozone periphery, where credit might still be scarce, account for less than one quarter of Europe s economy.

In that case, Greece s geopolitical position would be weakened, its economy would sink further into recession, and social tensions would rise. Moreover, instability would become chronic, because the eurozone would no longer offer a backstop for fiscal and financial laxity.

When the crisis struck, the economies of the eurozone periphery were buffeted by the twin shocks of spiking risk premiums and a collapsing housing market. At the same time, the German economy benefited from the return of capital fleeing the periphery.

Italy s low growth rates reflect several factors, including labor market rigidities, public sector under investment in the science and technology base of the economy, limitations on competition in certain sectors, and an extended period of structural adjustment to the eurozone environment.