The more you think about it, Greece is a textbook case of mindless sub-prime lending by non-Greek banks, biggest among them it seems, BNP Paribas - which is why President Sarkozy is so agitated .
Surely, at some point, the big banks involved in buying Greek bonds must have thought to themselves: Gee, these guys are borrowing an awful lot of money from us. Look at their debt to GNP ratio! How the hell are they gonna pay it all back? It's not as if they are building factories or gas pipelines with the money...
So just as with sub-prime mortgage lending, no one seems to have done any kind of basic risk assessment. True, the rating agencies were also slow on the uptake. So how come that also happened. What were the guys at S & P's and Moody's and all the others doing when they kept on awarding AAA status to Greece's junk bonds?
The more I think, the less it seems that the €uro has got anything to do with this. It's about the Greek government, egged on by Greek voters, spending a lot more than it could afford and all of it on things which would not generate future income.
So if it is not about the €uro then the €uro will withstand a Greek default or Greece's exit from the €urozone. Greece is probably too stupid for the €urozone, that's all.
This may also help explain why the Great She God Pound Sterling remains so obstinately Down against the €uro. What have we got to offer that the €urozone hasn't? Not much, it seems. Mr Cameron is as desperate for Tourists to come to the UK as Mr Papandreou to get them to Athens. Neither country has much else to sell. The UK is definitely too stupid for the €urozone.
The important point in this Blog is the prediction about the €uro. Greece can go up in flames and there will be very little effect on the €uro. It's much stronger than it's weakest link.