« The 2012 election in Mexico, early musings | Main | Positive campaigning is not all that it’s cracked up to be »

May 25, 2012


Feed You can follow this conversation by subscribing to the comment feed for this post.

From a cost-benefit point of view there won't be many reasons to stay, but I thought Spaniards wanted to stay? I think a survey was done recently showing that a majority of Spaniards, Germans, Greeks, Italians and Frenchmen (and -women) supported the euro as their currency. Without popular support for ditching the currency could any eurozone government ever really introduce another currency? And wouldn't they run into legal problems? If the euro is legal tender by virtue of the treaty on european union, wouldn't they have to withdraw from the treaty before introducing another currency as legal tender?

Good question. There are two ways to think about the answer. Both lead to the same conclusion, if the banking system collapses.

(1) If the banking system collapses, so will economic activity ... and popular support for the euro will then collapse. Governments will exit with popular support.

(2) If the banking system starts to collapse, governments interested in re-election will look down the game tree, and decide that exit is a superior option. They may be lambasted in public opinion, and they may lose re-election, but the alternative was that they will definitely lose re-election ... possibly to some very very nasty alternatives. (At the risk of violating Godwin's Law, I have to point out that the German election of March 1933 took place under not-dissimilar circumstances.)

If anywhere in Europe were run like the United States, I could imagine institutional sclerosis holding things up, but AFAICT both the Spanish and Italian prime ministers could pull the trigger first and let the courts sort it all out later.

I suspect that you're right on the legalities, however, which is one reason why I suspect you'd need to get far along the way into scenario #1 to see a pullout. It would have to be worth the lawsuits. The exception would be a country (like, possibly, Greece in the near future) that is staring into a fiscal apocalypse without foreign government support. In such a case, it won't take much for a government to decide that an unpopular and illegal move is actually in its best interest, future lawsuits be damned.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)