3 ms·

But everything you're saying would apply whether Greece was on the Euro or the Drachma. Yes, an entire country defaulting would screw a lot of creditors, but t

But everything you're saying would apply whether Greece was on the Euro or the Drachma. Yes, an entire country defaulting would screw a lot of creditors, but the risk of default should be priced into the loan/bond terms (interest rate, etc). That's part of the reason investors can make money on bonds, because there is a risk/reward curve they're riding, and the risk is that they won't get their money back. I get the "too big too fail" argument, I just don't get the "monetary union puts us on the hook for our neighbors" part.

afterburner 11y ago
That's funny, your phrasing outlines the paradox: it's a union, yet you don't consider it part of you, but simply a "neighbour" that can be squeezed at will. Monetary unions turn into transfer unions if the regions' productivity are not equal. This is clear from the union of states called the USA. Poor states constantly get federal money taxed from rich states. And there's nothing wrong with that; the whole country benefit from there not being ruined states in the union. Monetary unions also don't work very well without a fiscal union, under which transfers are far more easily arranged...