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Crisis—from the Greek “krisis,” for a turning point in a disease—is one of many English words we owe to the ancient Athenians. Now their modern descendants are reminding us what it really means. The design of the EMU illustrates a profoundly important truth about human institutions. Just because you don’t create a formal procedure for something you would rather didn’t happen, that doesn’t mean it won’t happen. This was one of the reasons Britain decided not to join the single currency. Even more alarming is the exposure of other EU banks to Greek debt, which totals $193 billion, according to the Bank for International Settlements. Factor in the risk of copycat crises in Portugal and Spain, and you begin to see the outlines of a disastrous Europewide banking crisis. If this continues, there is only one way for the euro to go, and that’s down.


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