PARIS (Reuters) – Unlike true love, the euro really is forever.
That may seem a reckless notion to advance just as Ireland becomes the second highly indebted member of the 16-nation single currency area to require a bailout, following Greece, and as bond markets close in on Portugal and Spain.
But the cost to any country of leaving the euro zone would be so high, and the damage that an exit would inflict on the currency and the remaining members so great, that no government would rationally choose to secede, or to push another out.
Argentina’s 2001-2002 economic crisis and $100 billion bond default, which reduced millions of people to poverty, would pale in comparison with the likely chain reaction across Europe.
“There would be chain bankruptcies. A run on the banks would be certain. It would be far worse than Argentina,” said Jean Pisani-Ferry, director of the Brussels economic think-tank Bruegel.
The “costs of the non-euro,” as they are sometimes called by Brussels insiders, would be multiple: political, economic, social, reputational and strategic.