What’s the impact of Grexit on the Eurozone? Probably nothing to speak of. Almost all the Greek debt is held by Greek banks or official institutions. If Greece leaves the Eurozone and brings back the drachma, the Greek banks convert assets and liabilities into local currency. Greeks will withdraw as much money as they can from the banks until they run out of reserves, but if Greece takes the great leap, the Greeks will be stuck with devalued currency, and it won’t matter where they put it.

The Spanish won’t follow. The Spanish left (“Podemos”) is putting people in the streets, to be sure, but there is a much deeper split in Spanish society than left vs. right, and it favors the Euro. The Catalans want independence from Spain, and want to stay in the Eurozone. They consider themselves more French than Spanish and rankle at the tax subsidies they pay to the likes of Andalusia. They won’t back the Madrid leftwingers who want even more subsidies for the poorer provinces. Italy is so integrated into the Eurozone that a departure is unthinkable. The Greeks can split, and everyone will wish them well in the monetary afterlife, but no-one will follow suit.

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