Domestic polls in productive European economies like Holland, France and Germany show continued support for maintaining the euro as a common currency. However, German Chancellor Angela Merkel knows German voters won't continue to fund vacations and pensions for Greek government workers. France has a stagnating economy.
Which leads to a compelling argument for shrinking the zone: Greece cannot remain a permanent fiscal drain on other European economies. "Bailout creep" propping up Greek political and economic failure could drag the rest of Europe into a depression; suddenly the political troubles Greece confronts become Europe-wide.
In this scenario, the surviving eurozone members accept the severe short-term economic costs in order to avoid more costly long-term economic damage. Better to drop one or two "weak branch" economies (Greece and Spain) than have the entire eurozone collapse.
Last week, Finland's foreign minister told London's Daily Telegraph that eurozone member Finland is preparing for a "full-blown currency crisis," precipitated by continuing weakness in vulnerable Euro economies. The Finnish government quickly denied it was preparing for a zone breakup. The foreign minister's comments, however, confirmed what everyone knows. The "trim the weak branches" scenario is under serious consideration.
Austin Bay is the author of three novels. His third novel, The Wrong Side of Brightness, was published by Putnam/Jove in June 2003. He has also co-authored four non-fiction books, to include A Quick and Dirty Guide to War: Third Edition (with James Dunnigan, Morrow, 1996).
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