Soros and Sinn weigh in on European Policy Options.

It all seems so black and white: Germany shoulders a greater share of the adjustment, and/or a price adjustment in crisis countries is inevitable. Note that the adjustment will either be an internal devaluation (reduction of prices/wages without a change in the exchange rate) or through an external devaluation (countries exiting the Euro, effectively leaving a fixed exchange rate regime, and depreciate their (new domestic) currencies).

There is also an interesting historical parallel. In The Economic Consequences of the Peace (1919), Keynes argued that Germany's war debt should be largely forgiven. He thought the absence of a German recovery would stifle the economic (and political) recovery of all of Europe. As an advisor to the British Government at the Verailles Conference he argued that German reparations should be limited to £2,000 million. This was less than what Britain owed the US in war loans! Nevertheless he had the audacity to suggest that a general forgiveness of war debts would benefit Britain. Certainly the German transgressions had been more objectionable than the Greek, Cypriot, Irish, Portuguise goverments in the early 2000s.