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FEB. 17, 2015
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But the ultimate question is whether, in these particular talks, which logic will prevail. There is the short-run possibility, which financial markets seem to believe is most likely: A deal that lets everyone save face and kicks the can of resolving those longer-term contradictions down the road.
Then there is the long-run possibility, that this standoff will force some resolution of these huge, slow-building imbalances in the European economy. In this sequence of events, Greece, the most extreme outlier on the debtor-creditor divide within the continent, leaves the euro entirely, and in the financial and economic chaos that follows the remaining countries using the euro form tighter bonds with an eye toward ensuring there are no more defections.
The first option seems most likely this time around. But what makes this debate fascinating for anyone who cares about global economics is the mere possibility that Europe’s real day of reckoning has finally arrived.
