Greek Euro Exit May Cost $1T

Tsipras tells Germany to stop demanding austerity
By Kevin Spak,  Newser Staff
Posted May 17, 2012 7:44 AM CDT
Greek Euro Exit May Cost $1T
People walk outside the Greek parliament on Tuesday, May 15, 2012.   (AP Photo/Petros Giannakouris)

(Newser) – Europe has hundreds of billions of reasons to try to keep Greece from unceremoniously ditching the eurozone. If Greece leaves, the rest of Europe would face catastrophic losses, Reuters reports. Greece would default on the roughly $250 billion in debt held by the ECB, IMF, and other eurozone nations, and that loss will likely be "high enough to eliminate the ECB's capital," one investor said. And the losses wouldn't end there because Europe would still probably have to prevent a total collapse or risk economic contagion.

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How bad could it get? One Guardian estimate puts the total cost at $1 trillion. But it's looking increasingly unlikely Greece will abide by its bailout deal; new elections are looming, and polls favor Alexis Tsipras' far-left party. In a BBC interview, Tsipras urged Europe, and particularly Angela Merkel, to "stop playing poker with the lives of people" by demanding such harsh austerity measures. That defiance has some European decision-makers pushing to rip the Band-Aid off and boot Greece. "It's going to hurt, absolutely," one diplomat tells Reuters. "But is it going to be lethal?" (Read more eurozone stories.)

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