Not included in the reported calculations is the question of commercial contracts to which Greeks are a counter-party. Shipping (in which Greeks are major players) comes immediately to mind. The litigation alone will be quite expensive and many Greek business may either choose bankruptcy or have it forced upon them.

Like a series of cascading NSF cheques when liquidity (corporate or personal) is tight, there will probably be a number of cascading bankruptcies, and not only in Greece. The additional pressure on European banks will be decidedly non-trivial.

Many international contracts including shipping contracts with Greeks will be denominated in dollars.  The rich Greeks and their companies left some time ago.

The really big danger from Greece is the instability in a hot-headed part of the world, and that Greece is the banking and trade capital for the neighboring region - so dominoes.

A bizarre article. Greece either will be prepared to meet the cost of staying in the Euro or it won’t. Either way, its not going to bring about the collapse of the Euro and its probably not going to have a domino effect either.  Conversely, the risk of government debt defaults is present in many places, and if it occurs in Greece it won’t just affect the Eurozone.

“This nonsense can of course be stopped in ten minutes if the EU:
1) announces that it will equip itself with a real central bank (a lender of last resort) that takes all risk of sovereign default off the table — with conviction and overwhelming force, with no ifs and buts, and no ambushes from the Bundesbank.”

No it won’t. Nothing “takes all risk of sovereign default off the table” and there is no such thing as “overwhelming force” in this context. Investors will lend to Greece, Germany, the USA, Britain, Australia or anyone else, only so long as they are confident that the particular government is able to repay the loans.  There are no absolutes.

“Yes, this means rewriting the German constitution, and in effect means the abolition of Germany as a functioning sovereign nation.”

A crack-pot idea.

“We at the Telegraph screamed from rooftops in the early 1990s that EMU was a destroyer of nation states, and democracies. So did the brave German professors. Nobody would listen.”

No, and they still aren’t listening, because its obviously not going to happen. There are all sorts of problems with the Euro, and indeed with our modern banking system in general.  It is possible that neither may be around in say 10 years time.  But EMU is not going to result in the extinguishment of German sovereignty and that has now become more obvious than it was two years ago. Time for the Telegraph journalists to abandon failed predictions and start looking out the window before predicting weather.