Eurozone's big fear is a successful Grexit

ONE of the things that is probably scaring eurozone authorities more than most people suppose is the threat that Greece may not only survive but actually thrive outside of the "common currency" area. The temptation for other peripheral economies to follow suit may then become irresistible.

As with many other things in life, the fear of something happening can often be worse than the event itself. It is only after the "worst" has happened that we realise that there are compensations to all states and that (to quote Franklin Roosevelt) "all we have to fear is fear itself".

If there were to be a Greek exit (Grexit) from the euro, it is reasonable to assume that a restored drachma would be pegged at a level well below one to one with the euro. Probably this will represent a sharp devaluation not only against the euro but against other currencies too.