It's not the fault of the euro

According to Paul Krugman in The New York Times, the Europeans can't figure out how to use the euro:

I’ve been troubled by reporting that focuses almost exclusively on European debts and deficits, conveying the impression that it’s all about government profligacy, and feeding into the narrative of our own deficit hawks, who want to slash spending even in the face of mass unemployment, and hold Greece up as an object lesson of what will happen if we don’t. For the truth is that lack of fiscal discipline isn’t the whole, or even the main, source of Europe’s troubles; not even in Greece, whose government was indeed irresponsible (and hid its irresponsibility with creative accounting).
No, the real story behind the euromess lies not in the profligacy of politicians but in the arrogance of elites; specifically, the policy elites who pushed Europe into adopting a single currency well before the continent was ready for such an experiment.
Consider the case of Spain, which on the eve of the crisis appeared to be a model fiscal citizen. Its debts were low: 43 percent of GDP in 2007, compared with 66 percent in Germany. It was running budget surpluses. And it had exemplary bank regulation. But, with its warm weather and beaches, Spain was also the Florida of Europe and, like Florida, experienced a huge housing boom. The financing for this boom came largely from outside the country: there were giant inflows of capital from the rest of Europe, Germany in particular.
The result was rapid growth combined with significant inflation: between 2000 and 2008, the prices of goods and services produced in Spain rose by 35 percent, compared with a rise of only ten percent in Germany. Thanks to rising costs, Spanish exports became increasingly uncompetitive, but job growth stayed strong thanks to the housing boom.
Then the bubble burst. Spanish unemployment soared, and the budget went into deep deficit. But the flood of red ink— which was caused partly by the way the slump depressed revenues and partly by emergency spending to limit the slump’s human costs— was a result, not a cause, of Spain’s problems.
And there’s not much that Spain’s government can do to make things better. The nation’s core economic problem is that costs and prices have gotten out of line with those in the rest of Europe. If Spain still had its old currency, the peseta, it could remedy that problem quickly through devaluation— by, say, reducing the value of a peseta by twenty percent against other European currencies. But Spain no longer has its own money, which means that it can regain competitiveness only through a slow, grinding process of deflation.
Now, if Spain were an American state rather than a European country, things wouldn’t be so bad. For one thing, costs and prices wouldn’t have gotten so far out of line: Florida, which, among other things was freely able to attract workers from other states and keep labor costs down, never experienced anything like Spain’s relative inflation. For another, Spain would be receiving a lot of automatic support in the crisis: Florida’s housing boom has gone bust, but Washington keeps sending the Social Security and Medicare checks.
But Spain isn’t an American state, and as a result it’s in deep trouble. Greece, of course, is in even deeper trouble, because the Greeks, unlike the Spaniards, actually were fiscally irresponsible. Greece, however, has a small economy, whose troubles matter mainly because they’re spilling over to much bigger economies, like Spain’s. So the inflexibility of the euro, not deficit spending, lies at the heart of the crisis.
None of this should come as a big surprise. Long before the euro came into being, economists warned that Europe wasn’t ready for a single currency. But these warnings were ignored, and the crisis came. Now what? A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley’s Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger “the mother of all financial crises”. So, the only way out is forward: to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states.
But that’s not going to happen anytime soon. What we’ll probably see over the next few years is a painful process of muddling through: bailouts accompanied by demands for savage austerity, all against a background of very high unemployment, perpetuated by the grinding deflation I already mentioned.
It’s an ugly picture. But it’s important to understand the nature of Europe’s fatal flaw. Yes, some governments were irresponsible; but the fundamental problem was hubris, the arrogant belief that Europe could make a single currency work despite strong reasons to believe that it wasn’t ready.

According to Wikipedia:

The eurozone is an economic and monetary union of sixteen European Union member states which have adopted the euro as their sole legal tender. It currently consists of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. Eight other states (not including Sweden, which has a de facto opt out) are obliged to join the zone once they fulfil the strict entry criteria. Monetary policy of the zone is the responsibility of the European Central Bank, though there is no common representation, governance or fiscal policy for the currency union.
Eleven countries (Denmark, Sweden, the United Kingdom, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Romania) are in the European Union but do not use the euro.
The term eurozone or euro area can also be taken to include third countries that have adopted the euro. Three European microstates– Monaco, San Marino, and the Vatican City– have concluded agreements with the European Union permitting them to use the euro as their official currency and mint coins, but they are neither formally part of the eurozone nor represented on the board of the European Central Bank.
Several other countries have officially adopted the euro as their sole currency, such as Andorra, Kosovo, and Montenegro, without an agreement. These states are also not considered part of the official eurozone by the ECB. However, in some usage, the term eurozone is applied to all such states and territories that have adopted the euro as their sole currency. Further unilateral adoption of the euro (euroisation), by both non-euro EU countries and non-EU members, is opposed by the ECB and EU.

Rico says the population of the Eurozone is 317 million. The population of the United States, which has used a single currency since 1776 or so (as even the Confederacy used dollars), is 300 million. It may take those backward Europeans awhile to figure it out, but they'll get there eventually...