True, but you can easily have a currency union without political union. For example, many countries use the US dollar or peg to the US dollar.
Greece could stay in the Eurozone, but the Greek government could default on its debt repayments. Of course, no-one would lend any more money to the Greek government. The government would immediately have to start spending within its means, and is that a bad thing?
The debt of the Greek government is so bad that if they default, it would completely colapse, all services suddenly cutoff probably leading to dangerous anarchy if not outright revolution. So yes, now it would be a bad thing. The EU should not have allowed Greece to be so heavily indebted but they could not force them, because it is a political issue. The greek government "decided" on that.
But this crisis isn't about that. This crisis is about finding ways to keep Europe chugging along without exposing the folly of exponentially-increasing government debt.
Also true. Even the U.S. is at risk of this "contagion".
I'm still confused by the fact that in a day that money can be freely created out of thin air, such debt will still make so much pain...
Imagine 2 cases:
Case 1:
ECB just printed several trillions of euro and lend it to greece for 50 years, then greece will have plenty of cashes to spend: They hire all the leading construction companies to rebuild their country and buy what ever high tech/luxury things made in France/Germany to decorate their home
Case 2:
Greece suddenly find out an area rich of petroleum near their sea shore, it worth several trillions of euro, and ECB have to print several trillions of euro to trade these petroleum(otherwise the deflation will destroy europe). Then, Greece hire all the leading construction companies to rebuild their country and buy what ever high tech/luxury things made in France/Germany to decorate their home
Comparing these 2 cases, in the first one, Greece produced nothing, in the second one, Greece also produced nothing, but they find something others want. Most of people will accept case 2 but not case 1
Why? I guess down to the basic, it is about fairness or justice:
If Greece can get free money and spend, why France and Germany can not? If anyone can just print money and do not need to work, then there will be no one making the real products, people will soon find out the money have nothing to purchase, then the monetary system will collapse
But strangely, if Greece happened find lot's of petroleum, then no one will argue about it when they get same trillions of euro from ECB, although they still do not work, but now they have something that others want
See? As long as you can provide something that others want, you will be fine. It seems this is the common sense when people are looking at economy related phenomenon, it also means: If you can not impress others with your products/services, you will have trouble
So I think, the real problem of Greece now is that they can not provide something that impress others
Why do people need to impress others with their products/services? I remember there is a chinese saying: In society, everyone is a beggar, the big beggar make big money and the small beggar make small money
Is there any other better way?