These pinheads are going to sweat sooner or later.
Germany’s financial leaders are only now finally beginning to understand what those of us who have done the math on EU-zone debt have understood for a year+: Germany simply does not have the resources to prop up the ECB to the extent necessary to prevent the Euro from imploding.
As such, Germany now has two paths ahead of it:
1. Back up the Euro with their own money and debt rating, which will work (now) for, oh, perhaps a year. Then when the numbers become apparent, they lose both their money and debt rating... for OTHER countries’ debt, not their own... or
2. Start planning for a significantly reduced Euro-zone, where they go back to the letter of the Maastrict Treaty and start enforcing the deficit limits therein, on *everyone*.
The brutal truth is that no common currency can work in Europe. The Med nations are spendthrifts and have been economic basket cases for debt holders going back to WWII or even further back (eg Greece). The northern states have both economic power and financial responsibility bred into them, which cannot be imparted to southern tier countries with any amount of lecturing.
to your points
1. they may be foolhardy enough to try this -- and you are correct that it seems a dead-end choice
2. this makes more sense, but quite frankly, who meets the Maastricht treaty today? at a pinch (with no facts at my fingertips), I'd say next to no one besides Luxembourg.
A smaller Euro-zone makes sense -- probably excluding Portugal, Italy, Greece. Spain actually better follows the Maastricht guidelines than Germany as i've read (not thoroughly). France and Germany will be part of that central region and the Benelux countries will tag along.
Estonia and Latvia WILL stay -- they have been desperately trying to tie themselves to every country possible to keep the Russian bear at bay.
Slovakia should learn and exit -- it gets no real benefit (anecdote -- on the Polish-Slovakian border, before Slovaki joined the EU zone, Poles used to go across to buy stuff (it was cheaper in Slovakia), but now the reverse happens) imho
who else? I think they would kick out Ireland (who i'm beginning to strongly dislike since their ship to the "palestinian territories")
Italy would be in better shape without the euro -- my Italian friends tell me that when the euro came, prices DOUBLED, and the cost of living in Italy is too high now.
Spain would be in doo-doo, but they got a lot of money from the EU in the form of infrastructure building (their roads etc. are better than Germany's imho).
Portugal would be better off
Greece would be in deep doo-doo as they have been made lazy by sucking at the EU teat for too long
Well now...what you say is true...the PIIGS, Greece first, MUST leave the euro to GROW.
FOLKS, the key here to remember DEFLATION, and these NATIONS (they’re not “states” to be exploited as with Phony-Care here in the U.S.) must leave the euro to GROW. Look at that Italian yield today, above 7%..how long before 8%>?
But NOT before to WATCH out for an attempt by the PHONY paper makers to try their own version of a Phony-Care scam to prevent temper hot inflation, >>>> IF they pull a ECB Sovereign backstop attempt upon Germany, and the Germans cry ‘uncle.”