Eurozone crisis live: Markets slump after Bundesbank says Greek exit is 'manageable'
Germany's central bank has made an 'incendiary' contibution by arguing that the eurozone could cope if Greece quit the single currency. Photograph: imagebroker / Alamy/Alamy
Traders say there are seveal reasons to panic -- the Bundesbank's prediction that a Greek exit from the eurozone would not be a disaster; the reports that eurozone officials are preparing individual plans for the aftermath of a Greek exit; even Lucas Papademos's statement last night that contingency plans are in place.
So are Europe 'playing chicken' with Greece, and those parties who say the current financial programme must stop? Or are we really heading for a break-up....
The Bundesbank's central message is that if push comes to shove, a Grexit would be a better option than agreeing to the demands of, say, Alexis Tsipras, the Syriza leader who insists Greece must renegotiate its bailout.
The Bundesbank comes very close to proposing that it's too risky to send any more money to Greece and that allowing Athens to cheat on the terms would destroy the credibility of the eurozone system.
The stakes are being raised. the timing, hours before an EU summit opens in Brussels, is also interesting. this could also be a shot across the bows of the new French leader who is challenging German policies on the euro and on Greece.