What can the EU do to resolves the debt crises?

There are a number of options available for the EU to solve debt problems:

• Increase ECB bond purchases. This is being done and more can be done, but then the central bank will be the holder of the bad paper. This makes the crisis solution a monetary problem and not a fiscal issue. Remember that the EU has debt limits in place for member countries. However, the ECB is the only organization that can act quickly in a crisis across the EU.
  
• Increase the size of the EU rescue fund. If there is a Portugal or Spain problem, there will be a shortfall from the 750 billion euro fund. The is a cost here. Countries will have to provide funds and Germany does not seem willing even though it is the deep pocket of the EU.
  
• Issue EU bonds. The common bond approach may reduce the risk of any country but begs the question of who the common bond feature will represent.
  
• The fiscal union solution to match the monetary union. This is the direction that makes the most sense. The EU should have more of federalist type of organization but the result will be less sovereignty for any one country.
  
• Doomsday scenario. Falling out of the EU has high costs and would be difficult to implement but this may be the reality of an imperfect union.
  

The 2013 ESM European Stability Mechanism to replace EFSF European Financial Stability Facility in two years. Rigorous analysis of debt sustainability from ECB, IMF and EC. There is a problem of CAC collective action clauses from creditors to change terms, but the bondholders have to accept the responsibility of lending money to countries who do not have the ability to pay.

The EU was supposed to be a safe haven for global investors. We have to accept that every six months there may be another EU debt crisis.