Euro- the Beginning of the End?

Exactly a year ago we referred to an article by Wolfgang Muenchau in the Financial Times in which he called in question the pricing of Italy's public debt.Only sensationalist journalists were at that time expected to call into serious question the underlying assumptions behind the Euro. A good friend of mine whose judgment is always very good remarked that a break-up of the Euro is not foreseen in any EU Treaty and could not happen.Now this is no longer accepted wisdom. The question is now: who would win, who would loose from any break-up. I always thought that the prudent thing to do - given the spreads in the Euro zone Bond Markets - would be to buy German Government Bonds. Whatever Germany's problems are at the moment, at a pinch we would rate its prospects higher than those of the other members of the Euro zone. Unless the governments start to steer a more prudent economic and fiscal course I predict that this provides a long-run one-way bet the like of which presented themselves only during the currency crisis and subsequent devaluations under the Bretton Woods regime of fixed but flexible exchange rates.