Goodbye, Euro?

It looks like the ruling Christian Democrats in Germany are preparing to allow the Greeks, and others, out of the Eurozone (h/t nc links):

German Chancellor Angela Merkel’s Christian Democratic Union may adopt a motion at an annual party congress next week to allow euro members to exit the currency area, a senior CDU lawmaker said.

If passed by CDU delegates, the proposal would still have to be agreed by all three parties in Merkel’s coalition before becoming government policy. Germany would then need to persuade its European Union partners to agree to changes to the bloc’s guiding treaty to allow a country to leave the euro.

The motion proposes allowing a euro member that doesn’t want to or is unable to comply with the common currency rules to leave the euro without losing EU membership, Norbert Barthle, the ranking CDU member of parliament’s budget committee said by phone. It has been approved for debate by CDU delegates meeting Nov. 13-15 in the eastern German city of Leipzig, he said.

“This motion will go through; I am sure of it,” Barthle said late yesterday. “It will become part of our party platform for future policy with regard to amending the framework treaties of the euro,” he said. “Any country that wants to leave the euro on its own should not be prevented from doing so.”

One way or another, the bill will come due for the Germans.  If they let the countries in the periphery out, those countries devalued currencies will make German goods too expensive to buy.  At the same time, the German banks will need to raise capital to make up for all the debt write-offs they'll have to take.  There isn't a painless way out of this mess.

Also, from Businessweek, via Ritholtz, Euro Trash Talk: