A brief response to just one of the comments from Peter Schneider. I said that Maastricht Treaty is "outdated" because it was negotiated 25 years ago, since when economic (as well as political) conditions in Europe and the world have totally changed. Economic understanding has progressed since the heyday of simple-minded monetarism, of which the Maastricht Treaty was the apotheosis. As our understanding of economics changes, the laws that are based on that understanding need to change too.

I think you have missed the main point of my article. The Greek government can issue all the new currency it wants, but under EU law it will remain liable in euros for all its existing debts IN EUROS. Those liabilities will include the guaranteed deposits in Greek banks. Greek citizens will be able to sue their government in the European Court of Justice to demand repayment in euros, instead of New Drachmas. The only way Greece could escape this liability would be to exit the EU completely, not just the euro zone.

I think you have missed the main point of my article. The Greek government can issue all the new currency it wants, but under EU law it will remain liable in euros for all its existing debts IN EUROS. Those liabilities will include the guaranteed deposits in Greek banks. Greek citizens will be able to sue their government in the European Court of Justice to demand repayment in euros, instead of New Drachmas. The only way Greece could escape this liability would be to exit the EU completely, not just the euro zone.

I'd like to deal with the issue of budget deficits, which is often presented as an argument why oil prices "will have to" go back to $100 or so. Most oil producing countries certainly need high oil prices - in some cases even about $100 - to balance their budgets. But the fact that you want something - or even need it - does not mean you are likely to get them. Italy and France would be able to balance their budgets if they could get 4% GDP growth. But that doesn't mean they actually attain such high growth rates. Instead, they have to accept large budget deficits - or, if deficits cannot be financed (because of the rules imposed by Germany on the rest of Europe), then the French and Italian governments must cut spending or raise taxes. Oil producers will now be in a similar position to Italy or France. If the Saudis refuse to cut their oil production sufficiently to push the price back to $100 (or even above $50) oil producing countries will have three options : (i) run budget deficits and use their currency reserves; (ii) cut public spending; (iii) raise non-oil taxes. In practice each country will have to choose a different combination of all three. just like European nations that face budget deficits and revenue shortfalls.