A Lesson for the Rest

The European debt crisis continues with Greece teetering on the edge of bankruptcy.

It seems pretty clear that Greece will default on its debts and return to a national currency.

It seems equally clear that Germany can afford to see Greece do that but cannot afford the bankruptcy solution applied more broadly in Spain, Italy, or Portugal.

So Germany has to make sure that bankruptcy is so painful to Greece (in the short run, anyway) that nobody else chooses to clear the decks of debt and start over.

And France, committed to the maintenance of the euro has the common currency, will go along with whatever Germany wants to keep German exports flowing to the rest of Europe that pays its debts.

It will be interesting to see how the question of Greek membership in the EU is handled when the primary symbol of EU membership--the euro currency--is sent back to Brussels.

I'd think that France's desire to build a strong EU will lead them to insist that Greece must remain in the EU (and receive those lovely EU payments) even if Greece defaults on their debts and abandons the euro.