The inevitable outcome of the Greek financial crisis – soon to be followed by comparable events in Portugal, Spain and probably Italy – will be the collapse of the Euro and a sharp halt in the momentum for European integration.
Ultimately, there is only one nation in Europe that investors trust – Germany. And they will only support the Euro and treat the southern European nations (now called Club Med) as credit-worthy if Germany backs up the debt. The current $1 trillion fund is a palliative that will not satisfy the market once the larger obligations of Spain ($1.6 trillion) and Italy ($2 trillion) come into question.
Germany will have to buy the southern European debts and assume national responsibility for their repayment. But while her leaders may be willing to do it, I doubt that her voters will acquiesce. German nationalism – the force that dominated Europe for one hundred years – will not take kindly to paying the bills for their profligate neighbors to the south.
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