Timothy Geithner’s idea on solution to Greece gains currency

“A Grexit would be traumatic enough that it would help scare the rest of Europe into giving up more sovereignty to a stronger banking and fiscal union. The argument was that letting Greece burn would make it easier to build a stronger Europe with a more credible firewall.”

This is an account by the then US Treasury Secretary Timothy Geithner of his conversation with German finance minister Wolfgang Schaeuble exactly three years ago, as recounted in his book covering the four years when the US and global economies were battling one of their worst ever crises.

Over the weekend, this same idea but now much nearer to becoming a reality was echoed in the one-page document presented to the eurozone finance ministers by Schaeuble — an idea that has deeply divided the 19 countries that use the currency.