It’s the gloomy Paul Krugman post this evening explaining
how quickly the whole Euro could unravel that has alarmed everyone.
It basically goes like this: Greece leaves the euro
"very possibly next month." That would lead to a massive run on
Italian and Spanish banks. There would be massive borrowing from the ECB to
prevent a banking collapse. At which point Germany has to decide: Shoulder a
major burden for the debts of Spain/Italy, etc., or let it all go.
He concludes: "And we’re talking about months, not
years, for this to play out."
This might be extreme, but it might not be, but the key is
that it would be a Greek departure that would set it all off. A country leaving
the Eurozone would have terrible consequences, which everyone realizes, and
actually that part of the reason that investors don't think it's going to
happen -- because it would be so bad….
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