1. Answer to what ?
1.1. Growth
1.1.1. Austerity bad
1.1.1.1. Europe is suffering from deficient demand
1.1.1.2. You can't ask for tough deficit reduction targets when demand is collapsing - it is an accounting impossibility
1.1.2. Austerity necessary
1.1.2.1. But demand in PIIGS was based on illusions of productivity
1.1.2.2. The only hope is the admittedly rather far-fetched expansionary fiscal contraction
1.2. The survival of the Euro
1.2.1. Austerity bad
1.2.1.1. Absent possibility of devaluing, social tensions too great without fiscal transfers
1.2.1.2. Austerity will force Greece and maybe others out through social tensions
1.2.1.2.1. The Euro won't recover from being seen as impernanent
1.2.2. Austerity necessary
1.2.2.1. Adjusting to reality will be hard inside or outside Euro
1.2.2.2. There's nothing magical that a devaluation does that other policies can't accomplish just as well
1.2.2.3. PIIGS are simply not very productive. Curing the productivity gap has been a long understood problem, and one the political elites have systematically fudged
1.3. The European project
1.3.1. Austerity bad
1.3.1.1. Historic opportunity to forge a federal Europe - splash out on it!
1.3.1.2. The solution could be the making of Europe: some expansion in the North, some migration, some green energy investment in the South ... Germany should step into its natural leadership position
1.3.2. Austerity necessary
1.3.2.1. An opportunistically built Europe will not be a good Europe. Be wise enough to waste a good crisis.
1.3.2.2. Productive investment in the South is all very well - but the scale is simply too small relative to the reality of the productive capacity of these economies. Best thing is to allow people to flow North to work on infrastructure projects there. That'll give you European federalism in a generation!
1.3.3. Austerity bad
1.3.3.1. It won't give you European federalism - it'll mean the rebirth of the far right in the North and will lead to a break-up of Europe