"Germany will not accept (this)," he said.
German inflation is now running at about 1 percent annually, and the unemployment rate is 5.4 percent compared with 12.1 percent for the euro area (the 17 countries using the euro).
- Third, debtor countries could temporarily drop the euro, restore national currencies and rejoin the eurozone later after improving their economies.
This would involve default, because most - or all - debts, bank deposits, wage agreements and commercial contracts would be redenominated in national currencies (say, the Greek drachma).
There would be damaging side effects, Sinn said. Bank runs would be unavoidable, as depositors tried to get euros before their conversion into cheaper national currencies.
As in Cyprus, governments might impose capital controls restricting money flows in and out of their countries.
Maybe Europe can "muddle through" with some mix of these policies, Sinn said. But he wasn't optimistic:
"We have to have debt relief [in effect: defaults] on a large scale. . . . It's obvious that some countries borrowed too much and don't have the competitiveness to repay."
There was pushback to Sinn's glum prognosis.
Economist William Cline of the Peterson Institute said that predicting default was more likely to bring it about.
The ECB's pledge to support debtors' bonds had lowered interest rates. Resurrecting the possibility of default would raise interest rates and increase debt burdens.
Jacob Kirkegaard, also of Peterson, suggested that the ECB can provide the credit needed to sustain trade imbalances. The alternative would be much worse.
Broadly measured, Europe represents one-fifth of the global economy.
The question is not who's right and who's wrong. No one really knows.
Europe may be out of sight and out of mind; but it's not out of trouble.