Booting out the weak members of the eurozone won't solve the continent's economic problems. Such a bold move would cause more harm than good for core members of the euro, most notably, export-driven Germany. A coordinated effort to share the pain seems to be the best option out there, but it's unclear how much pain the core eurozone countries are willing to take.
The integrity of the eurozone has been considered sacrosanct by its core members throughout the long running European sovereign debt crisis. The idea that a profligate member of the zone, like Greece, would need to be kicked out of the 17- member common currency was quickly dismissed by mainstream politicians of core member states, like Germany and France.
But cracks in that resolve have started to form. Two weeks ago, the leaders of Germany and France hinted that they could envision a scenario in which Greece would be allowed to leave the common currency. French President Nicholas Sarkozy took the issue a bit further last week when he said he could envision a "two-speed" Europe, where strong members of the European Union would grow closer while weak members would be left to putter in the background.
Traders have interpreted this to mean that a smaller eurozone may be on the horizon, one where the core members of the euro unite to form a strong fiscal and monetary union, while the peripheral nations exit the common currency and drown in debt. On the surface this seems like the best solution to a growing European economic crisis that shows no signs of abating. The core members have been good stewards of their money and shouldn't have to bail out the periphery just to save a 10-year-old common currency.
Of course, things aren't that simple. Most of the debt that the periphery has racked up over the past decade has been financed by banks that are headquartered in the core countries. There has been a lot of discussion surrounding what a hard default could do to the region's fragile banking system. If the sovereign debt didn't crush them, then the trillions of euros in private loans that were extended to people living in the periphery would do the trick.
To the average German citizen this probably seems very unfair. Why should they have to shoulder the heavy burdens of not only bailing out whole countries, like Greece, but also big rich banks headquartered in places like Paris and Amsterdam? Given this stark reality, some may question why there isn't a larger "Occupy Wall Street"-like movement made up of angry and unemployed young Germans camping out in Frankfurt parks.
