First Iceland. Then Greece. Next Portugal? And Euro dies?

That listing of countries might be a wonderful vacation schedule.  But, that seems to be the path of the European contagion ...
First, this news update: Greece's bond rating now means that one can expect only 30 cents on the dollar.  I bet there are quite a few Greeks who are now lamenting the gazillions spent on hosting the Olympics in 2004.  How much did they spend?  Ahem:

the overall cost (state and private funding) was estimated to reach 8.954 billion euro, not including the cost of projects that were completed or the construction of which were accelerated due to the Games, but which had been planned for construction regardless of the Games. Those projects included the Attiki Road highway, Athens' new Eleftherios Venizelos international airport, the tram, and the suburban railway. Of that 8.954 billion euro total, an estimated 7.202 billion was footed by the State, with the remaining 1.752 billion euro coming from the Athens 2004 Organizing Committee (ATHOC) and financed by the committee's revenues from ticket sales, television broadcast rights, Olympic-logo product sales, and sponsorships.

If we count all those investments "regardless" of the Games, well, let us round it up to 10 billion euros.  That was six years ago.  So, factor in inflation as well.  All it means is this: if Greece hadn't wasted away that precious euros, it would not be facing this disastrous scenario of not enough cash to pay the piper, eh! 
Of course, Greece's debts are way more than 10 billion euros.  But, my point is that having debt is one thing, but not being able to make payments is another.

It is not the Olympics aspect that Krugman writes about though.  He has far more profound things to say:

Greece seems to be spiraling over the edge into default; I just don’t know how it steps back from that edge now. Might it also leave the euro? That would be a total mess, inviting the mother of all bank runs

These developments could even make the Goldman Sachs folks respectable and responsible :)  Talk about timing!

Anyway, Hitchens' bottom line is pretty much simple: I told you so!  Apparently he did write that the Euro was not bound to last:

In the summer of 2005, Foreign Policy magazine asked its contributors to name one taken-for-granted thing that they thought was overrated or would not last. After a brief interval of reflection, I chose the euro.

A better prediction that Fukuyama's "the end of history" ...
Anyway, Hitchens writes:

How tragic it is that the euro system has already, in effect, become a two-tier one and that the bottom tier is occupied by the very countries—Greece, Portugal, Spain, and Ireland—that benefited most from their accession to the European Union. The shady way in which Greece behaved in concealing its debts, and the drunken-sailor manner in which other smaller states managed their budgets, has, of course, offended the Germans. It is openly said in Germany now that it would be better to bring back the deutsche mark than to be bailing out quasi-indigent and thriftless banana republics.

Well, this is the same stuff that Krugman refers to the "cohesion crisis"
So, will Greece exit the Euro?  Not so fast, cautions this report:

The most drastic solution - abandoning the euro as a prelude to devaluation - would not change the requirement to cut the twin deficits since short-term export competitiveness is not the key issue and opportunities to boost exports (including tourism) are quite limited, especially as the European economy remains weak.  Those who see euro exit as attractive should also recall the instability generated by historic episodes of devaluation.

Hmmm .... we will be in this for a long time ... hold on to your wallet, home, kids, ....