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Both options are the political equivalent of jumping off a cliff for Chancellor Angela Merkel. However, the current policy of short-term bailouts and inadequate firewalls, coupled with crippling austerity, will not work. For decades, the foundations of the Greek economy have been sliding into the abyss. The building cannot be repaired with a lick of paint. German policy is greatly misguided if it believes it can turn Greeks into Germans overnight.
I do not want to see the euro collapse. I also do not want to see any country default in a disorderly manner. However, I believe that the hope-over-experience attitude being adopted by the troika will cause a disorderly default. When we see the Commission's growth forecasts significantly downgraded between the autumn and the spring, is it any wonder that people are cynical when the EU bases its second bailout of Greece on an eight-year best-case calculation? We are turning into casino-goers pouring money we do not have into the slot machines, praying our number comes up.
Would the departure of Greece – and maybe Portugal – from the eurozone be extremely difficult? Yes. Would it take years for them to return to competitive growth? Probably. Are we putting off the inevitable in order to preserve the political project? I believe so. If Germany is not willing to pay, then there is only one answer in the long term: release some countries from the straitjacket and allow them to determine their own economic destiny. That will be very hard for our banks, and it will be even harder for our politicians. But I see no other realistic option.
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