As Greece Goes, So Goes the Euro

Der Spiegel recently reported that German Chancellor Angela Merkel viewed Greece’s exiting the euro as a manageable risk that would present no existential crisis for the common currency. That opinion, if she indeed holds it, is misguided at best and dangerous at worst.

It’s true that Greece poses a less naked financial risk to the rest of the euro region than it did in 2009, when revelations about the true size of its deficit triggered the crisis. Today, only about a fifth of Greek government debts are owed to the private sector, courtesy of the country’s bailout by the European Union, the European Central Bank, and the International Monetary Fund. And borrowing by Greek companies accounts for less than 1 percent of loans made by Europe’s biggest banks, according to J.P. Morgan.