And if Greece did default on its debt Merkel might now be taking about bailing out any German banks threatened by that default, but I can't see it making Merkel any keener on bailing out Greece itself.  Quite the opposite - I suspect Greece would then be excluded from any bail-out.

All you say is true but it's what we signed up for when we joined the EU and signed various Treaties.  If Greece does want to leave, the Lisbon Treaty, for the first time, provides a mechanism for doing so.  It appears to be generally accepted that Greece was accepted into the Euro based on falsified figures.  You reap what you sow...  A less inclusive Union might be talking about expelling Greece for so doing and endangering the currency Union as a whole.

There is a case for Greece leaving the Euro to enable a devaluation although I don't see how that addresses all the problems talos enumerates.  Indeed it might perpetuate them by remove the pressure on the Oligarchy.  It seems that it is Greece's oligrachy and systemic corruption that is its root problem and not membership of the EU/Euro which are probably more part of the solution than the problem longer term.

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