This piece on Crooked Timber really is superb. A few highlights – but do read it in full:

“the fuzzy compromise between supposedly depoliticized trans-national rules (run by the ECB), and national-level responsibility for compliance, is now increasingly problematic. Countries in loan programmes find their national capacity for choice dwindling to nothing. National autonomy is subordinated to the requirements of the transnational official lenders. What gets squeezed out is the democratically determined policy choice at national level. They are in Rodrik’s ‘golden straitjacket’. It’s politics without policy choice…

“Secondly, although the country-by-country approach clearly isn’t working, we don’t have any real capacity to generate a politics of common interest across the Eurozone. ‘Austerity’ is clearly having seriously deflationary effects across the Eurozone. Krugman regularly advocates a coordinated Keynesian stimulus programme to prioritize growth, led by a Germany willing to bear higher inflation and more domestic consumption.

“But while this might seem like an attractive solution from afar, we don’t have either the political capacity or the economic space to get anywhere near this at the moment. It is far from clear how we could have proper debates about alternative policy options, nor is it clear in what political forum new ideas could gain traction.”