There's no reason why the Euro zone should explode because of one smallish country leaving the club.
Then, it's very different from Cyprus, there aren't many wealthy people with big assets in Greek banks.
That is true but what if Spain, Portugal and Italy for example one day decide same as Greece? In my opinion, Greece is only test but lot of countries in EU have big debt problem.
This is one of the main unknowns and represents the two sides of the argument. Some, think the hardliners who wont budge for Greece, think that Eu exposure to the Greek debts isn't that bad and can be handled in an orderly way. In this case the EU lives on minus Greece. The other side says that a Greek exit destroys the EU., ie a grexit means the EU its no longer a union just a currency peg. And of course why should the peoples of Spain, Portugal, Italy and France be weighed down by cuts to spending, massive unemployment etc when they can vote in a party that exits the Euro / renegotiates the conditions. Lots of issues in an interconnected financial world arise from multiple countries reneging on their debt repayments
Can someone tell me how all of this started exactly? Why is Greece having issues, moreover wanting to/having to ditch the Euro?
Greece joined the EU by fudging its deficit % with the help of Goldman. The EU rules were no more than 3%. The EU currency peg pits powerhouse economies like germany against weak economies like Greece. When the greek economy goes into the toilet like it has for many reasons (inflated public sector, low tax revenues, asset writedowns, global slowdown) they cannot devalue their currency to make their exports competitive. All the holders of greek debt took a haircut a few years back but the austerity has done nothing to improve the situation. I have a feeling even unsecured bond holders (most risky investment) were paid out in full from bailout money when they should have lost their money.
Syriza wants to renegotiate the bailout conditions, not leave the Euro, but are keeping the option of leaving on the table as it will be worse for the EU if they pack up and grexit. Imagine the stock markets if it occurs, it will be pandemonium. I dont think it will happen.