I don't usually agree with Krugman, but I do agree with him very strongly that nations that don't control their currency don't control their economy. It's a problem for everyone right now except for the Germans that the euro exists as it does. A Grexit would, if it didn't lead to complete chaos, be a strong precedent for Italy and Spain, and then even perhaps France, leaving the single currency. For smaller EU members it might provide benefits by removing redundant state apparatus for a small area, but for the larger members it is more of a curse than a benefit. As a result, I think that essentially the euro would need to be a "dual currency" sort of model; a universally accepted currency by nations that are able to have a theoretical national currency that doesn't physically exist. Each nation would establish an exchange rate from the national currency to the euro, which could fluctuate to allow for devaluation. Businesses would express prices in local currency with the daily exchange rate posted. Russia did that for over a decade in the 1990s and has returned to it with recent currency instability. They did it with old-fashioned calculators. Now everything could be done with smartphone apps to instantly convert prices.

A system like that, although the Germans would oppose it, would solve Greece's problems. Denominating salaries and pensions in drachmas, and slowly devaluing the currency without increasing salaries and pensions, would return Greece to its old economic model of devaluing its way out of unrealistic retirement promises, without getting rid of the convenience of the euro.

And although you scoff at the populist parties, the simple fact is that they perform well because the technocrats of the EU ignore voters and popular will. Politicians will have to start listening to their constituents or the EU will rip apart in a most undignified fashion. Also, as bad as Syriza is doing, if Greece manages to muddle through it will be a victory for the populists. Expect to see more of them if immigration and ECB pressures keep unemployment high. Europe is just one recession away from torchlit parades everywhere.