due to the fact that the euro currency is essentially, a "gold standard" in regards to central banks of soverigen nations not having the ability to control the money supply - IE: not being able to devalue their currency, it maintains an economic imbalance that in effect "punishes" the less fiscially robust nations and benefits the more fiscially robust nations. And not in the obvious sense, but in a magnified, disproportional sense.
Case in point - the whole point of having a free floating market determined valuation of a currency is to maintain "balance" (in theory anyway). Normally when a nation is financially unbalanced, such as greece is where it has too high a debt to GDP ratio, and is experiencing a full blown financial depression... their currency would devalue and various investors pull money out of there markets, don't buy their bonds, etc.
This would cause a normal market determined devaluation of their currency. And, now with a currency of lower value, the nation in question (greece in my little example here) now suddenly becomes much more competitive in the global marketplace. They can become net exporters, due to their currency being quite cheap when compared to other nations currencies, and they also have the additional benefit of being able to pay off their debts with "cheaper money"...
in effect, if greece had it's own currency, the market would have devalued it, and as I type this, greek exports would be more competitive, this would fuel a "mini boom" that would quickly enable the government to tax this economic activity, and therefore pay off their debts at a cheaper price (due to devalued currency) and via self generated economic activity... ie: economic GROWTH.
but, greece (and others) cannot print their own currency, nor can they devalue their own currency. In fact, much of the strength of the euro can be accredited to the fiscal robustness and dominance that is germany.
Therefore, as long as greece (and others) are tied to the euro... they will be fighting an uphill battle because they will simply not be able to compete with the german financial prowess... and it sucks, because that's what is why greece can't win. they would need to be on track suddenly to surpass germany in their industrial and financial output, but they will have the overhanging debts that will greatly limit their ability to focus on "growth" (and lots of other reasons too...)
it's a catch 22 of sorts.
Howeever, if greece and others left the euro currency, they would in fact be the great benfactors of this. Germany, the UK, and other major soverigen debt holders would be the losers.
There have been over 60+ currency union breakups in the last 100 years, and even some of the most recent and "catastrophic" like Argentina circa 1999 - 2002, where they saw tremendous fiscal and economic problems. here is a quote from wikipedia:
In a 2001 interview, journalist Peter Katel identified three very serious crises that converged at "the worst possible time" in his explanation for why the Argentinian economy unraveled in the manner that it did, at the time that it did:
The Argentine peso was bound to the US dollar at the start of the 1990s by the Economy Minister at the time, Domingo Cavallo.
The large amounts of borrowing by former Argentine president, Carlos Menem.
An increase in debt due to the considerable shrinkage in the size of tax revenue that the government was receiving.[3]
By late December, 2001, riots had reached the capital, Buenos Aires.
Sound familiar? Well, it took less than 3 quarters for the "financial fallout" to fade away, and within less than 18 months, their GDP was on track to exceed what it had been before the crisis ever started. In the process, their economy boomed,
unemployement dropped like a rock, almost on a week-by-week basis... and it was basically all over within 24 months (and, it provided massive investment opportunities for those who were willing to bet on an Argentine recovery shortly after their currency imploded)
Taking argentina as a case study example, they only way out is to purge the books. and the only way to do that is to have a currency that the marketplace can devalue, in order to get past the mess and build economic growth as a function of opportunity being created, rather than growth as a function of "stimulus and bail outs" which does not create opportunity, and in this case due to the size of the debts, only delays the inevitable.
the euro currency is a failed experiment. There have been nobel prize winning studies on what factors make for a good currency union... in short, the euro zone fails on every single count.
and the longer it drags on, the longer the euro zone as a whole will suffer econimically, politically, and socially.
P.S. THIS IS A SUPER OVER SIMPLIFIED WRITE UP. but, i believe it will provide the lay-person who reads this thread some understanding of whats going on here...
