To save itself, Greece must exit the euro

by Jeremy Warner

Daily Telegraph
December 18, 2014

Of all the instabilities that concern international investors – from the plunging oil price to the collapsing rouble and the slowing Chinese economy, now fast transmogrifying into a systemic emerging market crisis – Greece is the one that bothers them least.

If you happen to be Greek, or are long of Greek bonds, the latest turn of events obviously matters a lot, but to the great bulk of the outside world it seems a contained and largely irrelevant problem, quite unlike the Greek meltdown of 2011/12 which brought the entire Eurozone close to collapse. It's yesterday's story, now eclipsed by the greater threat of mass retrenchment in emerging markets weighed low by excessive dollar debt.

Things have moved on quite a bit since back then, or at least, that’s what eurozone leaders have convinced themselves of; the banking system is stronger, and mechanisms are in place to prevent wider contagion from a Greek default or exit, including, crucially, the bond buying backstop of the European Central Bank.

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