Yes, many will argue that’s a stupid question. Yes, leaving the eurozone will be very costly for any party involved. But I begin to wonder.
There’s the rumour that French President Nichlas Sarkozy threatened to pull France out of the euro if Germany refused to provide financial assistance to Greece. But that’s part of a broader story.
The main issue is the price of stabilization, not the bailout price. That’s what Albert Edwards, the Societe Generale SA strategist, said a while ago. He said that unlike Japan or the U.S., Europe has an unfortunate tendency towards civil unrest when subjected to extreme economic pain.
The point is that it’s not about Germany refusing to play its traditional role and make concessions. It’s about the inability of governments to sell sufficient austerity measures to their publics.
Former Federal Reserve Chairman Paul Volcker has also warned about potential disintegration of the euro; there are other voices warning about it.
In such cases I always go back to the eight Eurointelligence scenarios for the “euro meltdown”. Today it is not funny to read.