Why bail them out, I am confused about this issue. Wont it make sense to just kick them out. that would make the Euro stronger.
Why not invade Germany and make them work for food and housing and use the rest of their money to pay of PIGS debt?
The european countries themselves are sick of their lands constantly becoming the battleground for wars with America and whoever they manage to piss off in each decade. I'd imagine they wouldn't want Greece kicked out of the EU because the more solid allies they have the more of an actual threat they represent to the big and stupid empires out there that would want to invade them for no reason.
that's the same as saying "california is broke why not just cut down to 49 states?" The implications on the USD would be spectacular if the US were to do that - just like the implications on the Euro would be terrible if they started letting countries default and then kick them out.
The old saying goes: what has be seen, cannot be unseen it means what has been done, cannot be undone this is an old traders wisdom. Greece frauded the EU, but they still let him join. It cannot be undone. Just like how in trading, a blow-up cannot be undone. And there is only one to blame.
Northern European banks are heavily invested in Greece. Kicking Greece out would require another round of bank bailouts. Northern European banks are also heavily invested in Eastern Europe - which is experiencing a true depression. Either way, is it really relevant? The imbalances caused by globalization with an easily expanded fiat monetary system is what's really the issue here. You think Germany would have prospered all these years if the PIIGS didn't buy products from them thru deficit spending? The PIIGS actually LOST productivity when they entered EMU. The ECB, heavily influenced by France and Germany, kept rates extremely low in order for their higher paid workers to remain competitive with their southern lower paid counterparts. These low rates created an environment in the PIIGS for the misallocation of capital, and subsequent bubble creation. In other words, their economies should have grown legitimately in the early 2000s thru increased production, but the Franco Prussians didn't want that - they preferred a system of dependent neomercantilism. So instead, these southern countries relied on deficit spending to create economic growth - which is the UK and USA business model. Now the Franco-Germans are paying the price. Focusing on Greece is important beacuse of the domino theory danger. However, let's not forget the Macro picture - just as in 2007-2008 people used the expression "it's all subprime" one can argue today that "all western nations are PIIGS."
California is a state. Greece is its own country with its own government. You are comparing Apples to Oranges. The USD works because we are once country with 50 states. The Euro is a bunch of countries with their own governments.