Wednesday, May 09, 2012

Adios Athens?

Kevin Drum thinks Greece may be gone, and screwed.

Bottom line: The German public is tired of Greece. The rest of Europe increasingly thinks of them as a special case and doesn't think Greek exit from the euro would produce insurmountable contagion to Spain and Italy. In addition, since the troika [EU, IMF, ECB] already owns most Greek debt, default wouldn't have much impact on EU banks. In other words, quietly but steadily the rest of Europe has been preparing itself for Greek default and exit from the eurozone. The only real reason to avoid it is that it wouldn't solve any of Europe's structural problems anyway. But German leaders don't seem to be buying that argument at the moment. A eurozone crackup is hardly inevitable, but it's becoming an ever more tolerable possibility with every passing day

They probably also think Greece will be an object lesson for others who might be tempted to bail.