I have to admit that there\’s a bit that I don\’t understand in all of this.
Why not default?
OK, so, Portugal owes more than it can repay on its own. This isn\’t an unusual situation, countries have done this many times before.
OK, so I can see that leaving the euro would be bloody difficult (even if I do think that\’s the only viable long term solution). And I know that default would lead to various banks elsewhere in Europe possibly falling over. So I can even see the merit of delaying default for a couple if years so that said banks can build up proisions against said default.
But here\’s the bit I\’m really not getting. We seem to be being told (not so much specifically, as it\’s just a general assumption) that default would mean the end of the euro. And that\’s the bit I just don\’t get.
Why would it?