Like a house which has lost its value enough so that the mortgage on the house is more than the house is worth, a similar comparison can be made for the under water economies of Europe particularly Greece and Portugal. Greece is in a terrible shape and were it not for the fudging of the deficit, I really doubt they would have been even admitted into the Euro Currency. I really see any exports made in Greece or even Portugal for people to buy, so how are they going to pay for all the loans being given to them to stay afloat. It is like you have cosigned on a loan and then have to bail the cosigner so that your credit score don’t take a hit. The same is going on with the Greece. The European Union having admitted the Greeks into their Union are now putting more and more money into a money pit or as we say in Finance it is sunk cost.
I know it can be scary situation if Greece defaults and the ripple effect is felt through other European countries, but is the European Union ready to keep on propping up the Greek government and its people indefinitely since their exports are negligible and the amount of benefits generous enough that it still attractive to thousands of illegal immigrants from the east. But to be fair and truthful, the economy of Greece is not that competitive and the same can be said about Portugal and Spain with rigid labor laws and overly generous benefits. Unless the troubled economies reform themselves drastically (no matter how much pain there is since they have enjoyed illusionary prosperity for a long time), they will ultimately have to exit the Euro which accordingly to me seems like a better idea than this uncertainty about if they will exit.