Jason OMahony - Irish political blogger, Irish politics, EU politics
 
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Is Greek ejection from the euro inevitable?

Posted by Jason O on Oct 22, 2011 in European Union

The Greeks: They'll only take so much.
The Greeks: They’ll only take so much.

Watching the violence in Athens, you can’t help starting to speculate about the long term future of Greece in the euro, if only for the feeling that the Greek mindset just won’t tolerate for much longer what is currently on the menu.

Think about it: all they are being offered is permanent austerity, and this from a country which (unlike Ireland) does not seem to actually have a functioning high value export economy. Devaluation is probably the only tool left in the locker, and even that is only a short-term solution if not accompanied by that the kind of fundamental economic reforms that have people on the streets objecting¬†in the first place. It’s a bloody awful scenario, and either civil war or the rise of a far right nationalist “F**K them all” movement is not that far fetched either.

The problem, of course, is that once you let one country leave, the markets immediately accept the concept and start looking at who is next? How do we prevent that? Possibly by coordinating Greek exit with the activation of the “Big bang” shield of eurobonds and fiscal union for the rest of the eurozone? It might work, but unfortunately is reliant upon masterly coordination and leadership by our leaders. Oh crap.¬†

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