"Greece will be forced to return to the drachma and devalue, and the default will cause bank runs and money flowing into Germany and the United States as the only viable safe haven bets," he declared the day before Sunday's Greek elections, irrespective of which party would win. "Greece will default because there is no other choice regardless of anyone's politics."
He then walked through the falling dominoes: "It will hit the (European Central Bank), the banks on the other side of the derivatives contracts, all of the Greek banks who are really in default at present and being carried by Europe as well as the nation, and the Greek default will spread the infection in many places that we cannot imagine because so much is hidden and tucked away in the European financial system."
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"It will hit the (European Central Bank), the banks on the other side of the derivatives contracts, all of the Greek banks who are really in default at present and being carried by Europe as well as the nation, ...." blah, blah, blah.
No it won't, or at least an exit from the euro will make it more likely that those counterparties will not suffer as badly as if Greece stays in the Euro. The external contracts will remain in euros, dollars or whatever but allowing the drachma to float against the euro means that Greece has a chance to reduce its internal costs to a level where it can operate as a functioning economy.
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