Greece, Grexit and the Eurozone

Tim Worstall:

As part of the verbal and political sparring leading up to the coming Greek elections, we see that various Germans are now saying that the euro, the eurozone, could survive Greek exit from it just fine.

My own opinion is that this is mistaken: but not for the reasons usually thought of. Sure, if Greece did exit then there may or may not be a spike in interest rates in, say, Portugal and or Ireland.

Maybe the ECB would be able to deal with any such outbreaks if they did occur. But that’s not the dagner to the euro at all, that someone else is forced out after Greece leaves.

Rather, the danger is that if Greece leaves and it works for Greece then other people are going to start asking, well, why don’t we do that?