Having previously insisted that a No vote on the lenders’ last terms would see their country forced out of the euro, Schäuble told the Bild newspaper that the choice before them on Sunday was between holding on to the euro and being “temporarily without it”. It was far from clear what Schäuble had in mind, but economists have mooted the notion of a period in which Greece might go back to its national currency, the drachma, while its economy recovered. With pharmacists in Athens reporting that the government had rationed the distribution of drugs, and fears being raised of food shortages within weeks, the finance minister of Europe’s biggest economy said: “It is clear that we will not leave the [Greek] people in the lurch.” What effect Schäuble’s last-minute intervention may have on the vote is impossible to gauge. But it appears to favour the No camp. His remarks seemed to endorse the claims of the Greek government, which has called for a No vote, to the effect that a majority in favour of rejection would not lead to the country’s exit from the euro (“Grexit”).
Greek referendum: Germany says it won’t leave Greece in the lurch | World news | The Guardian
The Oxford Economics thinktank warned that the closure of Greece’s banks and the imposition of capital controls last weekend would be difficult to reverse. “Cyprus was able to gradually loosen capital controls because of a decisive and credible commitment to reform. This is not possible in Greece,” it said. “Our latest scenario analysis suggests an exit probability of around 67%.” In a reference to the 2008 collapse of Lehman Brothers – the spark that detonated global recession – Megan Greene, chief economist of the Canadian asset management firm Manulife, said: “Grexit would be a Lehman-type event, but with a much slower fuse.”
Greek referendum: Germany says it won’t leave Greece in the lurch | World news | The Guardian
She added: “The immediate impact might be relatively muted in the markets. But the next time there is a cyclical downturn in Europe, bigger countries like Spain and especially Italy may decide they’d like to benefit from a devaluation to return to growth and leave the eurozone themselves. This would ring the death knell for the common currency.”
Greek referendum: Germany says it won’t leave Greece in the lurch | World news | The Guardian
But the divide that is now opening up in Europe also has something to do with Merkel's leadership style -- and with her idiosyncrasy of allowing things to drift for extended periods. This method works when it comes to negotiating a compromise, and when everyone involved is interested in a favorable outcome. But it reaches its limits when someone like Tsipras is determined to carry things to the extreme. It has long been clear that Greece is a special case in the context of the euro crisis. It is a country in which neither the taxation system nor the land registry system works, a country that is so deeply in debt that no reasonable economist still believes that it can ever repay what it owes. In addition, parties that habitually plundered the state ran the country for years. Then came Syriza, a movement that, at least in its radical quarters, dreamed of toppling the system.
Merkel's Leadership Has Failed in the Greece Crisis - SPIEGEL ONLINE
To understand Merkel's policies, it is worth turning back the clock to 2003. She had only been head of her party for three years and was in the midst of writing a new agenda for the CDU. There were four-and-a-half million unemployed in Germany, social security coffers were empty and employers were groaning about an excessively high tax burden. Germany wasn't nearly as badly off as Greece is today, but it was in urgent need of restructuring, and Merkel began to prescribe a strict reform program for the country. The McKinsey management-consulting firm provided the numbers to support her bitter message of austerity.
Merkel's Leadership Has Failed in the Greece Crisis - SPIEGEL ONLINE