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Don't kid yourself: A Greek exit is a Black Swan

“For me, a Greek exit has long since lost its horrors.”
--German economy minister Philipp Rosler, July 22, 2012

So let me get this straight. Europe has been moving heaven and earth for the past two years to prevent a Greek exit. We were informed in hushed tones that a Greek exit would be a disaster for the eurozone. Trichet said that default by a eurozone government was impossible and “unimaginable”, and that such talk was irresponsible. We were told that anglosaxons didn’t understand “Europe”, that our arithmetic and pencilled debt ratios were irrelevant.

Now, the European wizards are telling us that a Greek exit/default/repudiation is not only thinkable, but not a big deal. “Nothing to see here folks, move along.” As a colleague at Moody’s used to say about managements in general: “No problem, no problem, Oops!, no problem.”

So don’t worry that, after spending billions to prevent an exit, Europe is about to cut Greece loose. There will now be fewer but better eurozone governments; what Radio Tokyo used to call a “strategic consolidation of forces”.