KRUGMAN: Here’s how the whole Eurozone could unravel in just a matter of months

By Joe Weisenthal
Paul Krugman has a gloomy post this evening explaining how quickly the whole Euro could unravel.

It basically goes like this: Greece leaves the euro “very possibly next month.” That would lead to a massive run on Italian and Spanish banks. There would be massive borrowing from the ECB to prevent a banking collapse. At which point Germany has to decide: Shoulder a major burden for the debts of Spain/Italy, etc., or let it all go.

He concludes: “And we’re talking about months, not years, for this to play out.”

This might be extreme, but it might not be, but the key is that it would be a Greek departure that would set it all off. A country leaving the Eurozone would have terrible consequences, which everyone realizes, and actually that part of the reason that investors don’t think it’s going to happen — because it would be so bad.
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