Stratfor on Greece and Germany and Exiting the Euro

We talk of Greece leaving euro, but what if Germany left Euro? Below some thoughts by Stratfor.

Scenario 1: Germany Reinstitutes the Deutschmark

Scenario 2: Greece Leaves the Euro

Europe therefore finds itself being tied in a Gordian knot. On one hand, the Continent’s geography presents a number of incongruities that cannot be overcome without a Herculean (and politically unpalatable) effort on the part of Southern Europe and (equally unpopular) accommodation on the part of Northern Europe. On the other hand, the cost of exit from the eurozone — particularly at a time of global financial calamity, when the move would be in danger of precipitating an even greater crisis — is daunting to say the least.

The resulting conundrum is one in which reconstitution of the eurozone may make sense at some point down the line. But the interlinked web of economic, political, legal and institutional relationships makes this nearly impossible. The cost of exit is prohibitively high, regardless of whether it makes sense.

Read more: Germany, Greece and Exiting the Eurozone | STRATFOR