In my view, the greatest threat to the euro is that Greece will make a success of default and devaluation. Something like it has happened several times before, notably with Argentina in 2002, when it defaulted and devalued. The country went from an appalling financial crisis to growing by 11pc in the space of 18 months.Firewalls round the voters? Silly question. You impose technocratic administrations on those countries which fail to perceive the benefits of austerity and then you send in the Brussels bureaucrats to run their economies. Who cares about the voters? Ask the Greeks ...
Suppose that once the new drachma has fallen by 30pc to 50pc, Greece begins to show signs of growth. How would it then be possible to persuade the electorate of Spain, Portugal, Italy, and even Ireland, that there is no alternative to years of misery? It is all very well building firewalls to stop financial contagion, but how do you build firewalls around the voters?
27 February 2012
The Telegraph is wondering if the game is worth the candle: