That was the question that RT’s Lauren Lyster was asking last night. My short answer is not necessarily. The long answer is that policy makers have a lot of ways to continue the ball rolling. They can allow Greece to default and recapitalise the banks first and foremost. This may be costly, but they could just start with the most undercapitalised and continue on down the line as markets see more banks and more sovereigns running into problems. On Spain and Italy, the ECB will do their part – how much is the question and using what kind of quid pro quo.
The bottom line is that financial Armageddon doesn’t happen overnight and Eurozone default is not synonymous with breakup. Angela Merkel, the German Chancellor, is even talking about a future ESM (European Stability Mechanism). So, there are a lot of missteps that get you from here to there.
Video below