Buiter gets it right

From The Economist:

In this context, all the talk of Greece's euro exit doesn't help. One might assume that a Greek exit would "lance the boil" and allow the other countries to deal with their own problems. But as Willem Buiter of Citigroup points out in a private research note (hence no link)

Greece's exit would create a powerful and highly visible precedent. As soon as Greece has exited, we expect the markets will focus on the country or countries most likely to exit next from the euro area. Any non-captive/financially sophisticated owner of a deposit account.... will withdraw his deposits from countries deemed at risk - even a small risk - of exit. Any non-captive depositor who fears a non-zero risk of the future introduction of a New Escudo, a New Punt, a New Peseta or a New Lira would withdraw his deposits at the drop of a hat and deposit them in the handful of countries likely to remain in the euro area no matter what - Germany, Luxembourg, the Netherlands, Austria and Finland.
The funding strike and deposit run out of the periphery euro area member states (defined very broadly) would create financial havoc and most likely cause a financial crisis followed by a deep recession in the euro area broad periphery. 

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