Earlier quoted context omitted.
The banks that loaned the money for those "mortgages" are counting on being payed back. If they aren't, they might go bankrupt, causing a financial crisis. Or, they might start lending a lot less , or call in their loans early, putting the squeeze on others, including other banks, causing a financial crisis. And a financial crisis affects everyone. You are nothing to a bank, a bank is huge, and fully expects some peo…
But everything you're saying would apply whether Greece was on the Euro or the Drachma. Yes, an entire country defaulting would screw a lot of creditors, but the risk of default should be priced into the loan/bond terms (interest rate, etc). That's part of the reason investors can make money on bonds, because there is a risk/reward curve they're riding, and the risk is that they won't get their money back. I get the…
Monetary unions turn into transfer unions if the regions' productivity are not equal. This is clear from the union of states called the USA. Poor states constantly get federal money taxed from rich states. And there's nothing wrong with that; the whole country benefit from there not being ruined states in the union.
Monetary unions also don't work very well without a fiscal union, under which transfers are far more easily arranged...