Stiglitz has been right about eurozone from the beginning. He right again, when saying that Draghi’s confidence trick will not work this time; it's clear EZ members will not do “whatever it takes” and, by now, it is also clear that the hands of the ECB are tied. EZ southern countries' bargain is very risky on a Grexit.



Solutions are astonishingly simple. Agree to a pan-european political *mechanism* for setting conditionality, instead of the current, non-political, fixed, "expert"-led, authoritative and oligarchic approach. It must be really much more political than the eurogroup and ruling parties in member countries. That's democracy. Accept that usual debt and interest cannot be used. Quantifying, in a single step, how to replace the ECB, as lender of last resort, with European fiscal authorities, is intractable. Postpone the discussion on the political mechanism for later, but set a starting date. Stop excessive (and excessively failed) austerity claims and accept ILO intermediation for labour law regulation, or suggest another intermediary. Forget doctrines for reducing the public sector of a foreign country and reducing pensions (dictating policy), usually embedded in austerity. That's it! A deal can be made!



The potential downside in geopolitical terms is large for all.



On economic terms, it depends on markets being convinced that other potentials are more adamant on sticking with the euro (very doubtful), or are out of the woods. Possibly, the spike in bond yields will not be excessive, but it will last and will subjugate southern countries to continued economic stress, whenever leftists raise their percentages. It will exaggerate market imposed neoliberal doctrines, as was the case for Greece. Will there be a next one down the road? If one is likely, it is Portugal, I would say. Will that affect the EU? How will the EU handle EZ-exiting countries' debts?



Some more details on my thinking:



(a) Germany has not been following its own position, "sweating in front of its own door," as Wolfgang Schäuble suggests for all (that is regarding German banks lending the Greek government, where Germany should have taken part of the hit, not to include war reparations);



(b) replacing the monetary authority, as a lender of last resort, with European fiscal authorities, was never in the treaties, it is an ad hoc approach and has been included/forced in EZ institutions during the crisis, when southern countries had an existentially weak negotiating capacity;



(c) fiscal replacement of the lender of last resort role of the central bank has been provided on the basis of conditionality, which is politically unacceptable and exposes the lack of adequate and functioning political institutions in EZ.



In essence, the "German position" (actually northern) of "not a transfer union," serving as a non-starter to negotiate a political context for the case of European fiscal authorities replacing the lender of last resort, is a hidden political blackmail that (hopefully) will not work.



In other words, even if Greece and southern Europe were to *try* and follow a "German-projected mindset," there is no chance that this will happen in terms of usual debt and interest payments. The distance in too large.



Not only that, but the chances of success of such an attempt are very-very slim, unless the "German position" is modified (not simply moderated), so that they are willing to spend part of their surpluses, to boost German and (by imports) European growth.