Greek Crisis Fallout: Could the Euro's Days Be Numbered?

The frenzied betting by financial markets against the stability of Greek government bonds is a clear indication that many investors don't believe Athens will find a way to deal with its massive debt — at least not without an equally huge European bailout. But beyond the market speculation lies a longer-term question that is tormenting the 16 euro-zone nations: Could the Greek crisis be the beginning of the end for the common currency, just eight years after its first notes and coins were issued? Might the doubts and pressures that are driving the euro's value downward lead to the eventual implosion of Europe's most concrete achievement thus far? 

The responses, of course, depend on who you ask. However, it's clear that if levelheaded economic experts are even pondering the viability of Europe's monetary union, the situation is grave indeed. "This is a very deep crisis for the euro and all of Europe because what we have is a terrible debt and deficit problem that virtually all European nations share and no collective structures to deal with any of it," says Philippe Moreau Defarge, a European affairs expert at the French Institute on International Relations. "Europe is being forced to recognize it isn't as rich or as well-organized as it thought, and faces several long, hard years of finding its way back to solid ground." (See "Greek Tragedy: Athens' Financial Woes.")

And what about the future of the euro? "I think it's quite possible we could see the euro gone in several years — or at least reduced to a currency only used by France, Germany and a few small nations keeping it alive," says Bob Hancké, an expert on European political economics at the London School of Economics. "The problem is that monetary union was never followed up by political union to coordinate budget and taxation practices and create euro-zone institutions and capacities to help member economies adapt to changes and turmoil. The result is member governments are left very few ways to deal with the current attack on Greek debt and the severe pressure that it's putting on the euro."

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