Give some thought for one moment of the possible consequences of Greece leaving the Eurozone.
It would mean as a start default on it’s debt because the Drachma would be hopelessly devalued against the Euro. Their debts would stay in Euros. After restructuring these debts would need to be serviced in Euros at a hopelessly unsustainable rate.
The country would not be able to raise any finance on world markets.
In short Greece would be ruined.
The possibility of debt restructuring is almost certain but from inside EMU, going it alone is impossible.
That is another factor which is a danger to sovereign states joining the EMU. Once in you almost certainly cannot leave without disastrous economic consequence’s.
I think the whole point of Greece leaving the euro would be to convert their debts into another currency which, of course, they could then print into oblivion. Otherwise it makes no sense. Technically it can be done because that’s precisely what they did when they joined the euro: their bonds stopped being denominated in drachmas and overnight they became denominated in euros. That was part of the problem – bond investors suddenly thought that since the Greeks couldn’t debase the euro then their bonds carried a lot less risk. They didn’t fully consider the more likely outcome of the Greeks eventually defaulting instead.
The most immediate problem with leaving the euro would be the issue of bank runs – any hint of Greece leaving the euro and everybody transfers their savings out of Greek banks before their savings get converted to junk. So they would have to do the conversion overnight and temporarily lock down everyone’s bank account without warning – I believe Argentina did something similar 10 years ago.
Of couse if that does happen then apart from the obvious riots in Greece that would ensue, and the need to bail out the creditors, everyone would move all their savings out of their Spanish/Irish/Portuguese bank accounts for fear of the same thing happening in those countries. Result: bank runs all round Europe, chaos, breakdown ,etc.
So as you say … it really ain’t going to happen.
Some have considered the possibility of Germany leaving the euro – since bond holders would not complain about having the bonds converted to deutschmarks. However that would cause a run on the euro as people would realise that as soon as Germany left they’d be followed by the other strong economies, just leaving the weaker economies to debase the euro.
So again it ain’t going to happen.
As you say, there really is no way out of the euro.