Kyle Bass: Greece a failed state, Euro will collapse, Japan debt crisis next

[True Federalist (진정한 연방 주의자)]

The Euro will (probably) not collapse. It seems likely that Greece is going the leave the Eurozone though. (And it will be for the best of both Greece and the rest of the Euro states.)

If Greece leaves it will trigger contagion. Look what happened when Lehman Brothers collapsed.

Spain and Portugal might fall out as well, but I don't think we'll see a complete collapse of the Euro.

[True Federalist (진정한 연방 주의자)]

The Euro will (probably) not collapse. It seems likely that Greece is going the leave the Eurozone though. (And it will be for the best of both Greece and the rest of the Euro states.)

If Greece leaves it will trigger contagion. Look what happened when Lehman Brothers collapsed.

Spain and Portugal might fall out as well, but I don't think we'll see a complete collapse of the Euro.

If Spain falls out, Italy will too. If Italy falls out, so will France. If France falls out, the entire point of the project is finished.

Nah.  Once it gets to the point that countries Germany actually cares about might be forced to leave the Euro, Germany will agree to step in and backstop the Euro more.  Germany has no reason to care about Greece or Portugal.  It definitely cares about France and Italy, but I'm not certain about Spain.

[True Federalist (진정한 연방 주의자)]

even if the banking system did collapse, Greece would still need an expansionary fiscal and monetary policy. As would the rest of Europe.

Well, after the collapse of the banking system and the consequent reintroduction of the drachma, Greece will be free to adopt the policy it needs, won't it?

The issue here is that, whatever the policy that Greece needs, it is not the same policy that Germany needs - or, for that matter, not even the same policy that Italy needs. Greece needs to get out from under a mountain of obligations it cannot fulfill and it needs to become a lot more competitive. No plausible fiscal or monetary policy, expansionary or otherwise, is going to do the trick, I am afraid, at this point. The more money you try to pump into the European economy, the more of it is going to wind up in Germany. Some of it might go under an occasional Greek mattress, but that isn't going to do much good either.

With the bank run that has begun, the return of the drachma is inevitable now.  People aren't going to keep euros in Greek banks when they fear they'll be turned in drachmas overnight.  I can't see the current Greek non-government being in a position to halt the run anytime soon, and by the time something could be done, it will be too late, as there will not be the necessary trust for people to put the money back even when what needed to be done to stop the run has been done.

[True Federalist (진정한 연방 주의자)]

With the bank run that has begun, the return of the drachma is inevitable now.  People aren't going to keep euros in Greek banks when they fear they'll be turned in drachmas overnight.  I can't see the current Greek non-government being in a position to halt the run anytime soon, and by the time something could be done, it will be too late, as there will not be the necessary trust for people to put the money back even when what needed to be done to stop the run has been done.

One has to just hope, you are wrong. The spontaneous transition will be very unpleasant. Perhaps, they still can stop the run. One can only hope.

If Greece actually had a government, it probably could stop the run and at least delay the crisis longer.  But it doesn't.