Over the weekend, while looking for word of Greece’s fate, I found stories on Finland instead. Finland held elections and a “nationalist” party that finished in second place reportedly has a secret plan with respect to Greece and the euro. According to the plan as reported, by vetoing the bridge loan that Greece is currently seeking, combined with other political maneuvers, Finland could force Greece off of the euro. This would lead to a cascading effect, with Spain, Italy, and Cyprus following soon after. Some analysts would include Portugal and Ireland in that list. By the time the euro exits had become a parade, Finland too could abandon the euro. With the loss of five or ten countries, the euro would again be primarily a project of the Germans and the French, barely clinging to its status as an international currency. The whole joint venture might fall apart.
The euro is politically weak enough that this story sounds almost plausible. Yet the monetary union is weak indeed if its future can be vetoed by one political party in one country in a corner of the euro zone. The whole of Europe has a lot to lose if the euro goes away, particularly if you stop to think of the fees everyone would again be paying to banks. A single day of currency conversion fees in a post-euro Europe would be more expensive than the entire bridge loan Greece is currently shopping for. Financially, then, walking away from the euro doesn’t add up, and it seems likely enough that someone will eventually come up with a solution that holds the euro zone together.