Paul Krugman was in Spain recently.
In this video which has a lot of discussion on the European crisis, Krugman says that the ideal solution for the Euro Area will be federal but doesn’t hope to see it in his lifetime unless advances in medical sciences is made which will make him live longer. (Time: 1:22:36)
He rightly points that a degree of trust required to do so.
This is lacking and someone really needs to build this!
Also, from NIESR, the pace of the recovery compared in various deflationary episodes in the UK’s history: